Overview
- From April 2029, pension contributions made via salary sacrifice above £2,000 a year will lose their National Insurance exemption under legislation moving through Parliament.
- HMRC estimates 7.7 million employees use salary sacrifice and about 3.3 million currently exceed the £2,000 threshold identified for direct impact.
- The OBR calls the behavioural response highly uncertain, outlining scenarios in which employers switch contribution methods, hold down wages, or end salary sacrifice schemes.
- OBR materials reference substantial pass-through of employer costs to staff, while Treasury costings forecast £4.8bn in revenue in 2029/30, falling to £2.6bn the following year.
- Industry groups and former minister Sir Steve Webb warn modest earners could lose out, as the Treasury defends the change as targeting high earners and says 95% of salary sacrifice users earning under £30,000 are protected, with an ABI/REBA survey finding 99% of businesses expect to be affected.