Overview
- Reports ahead of Wednesday’s Budget suggest the tax-free pension salary sacrifice could be capped at £2,000 a year, with further contributions incurring standard National Insurance of 8% for most workers and 2% for higher earners.
- Industry estimates say limiting the relief could raise roughly £2 billion to £4 billion annually for the Treasury, drawing warnings from the ABI and other groups about poorer retirements.
- Possible start dates reported include immediate implementation on Budget Day or a deferral to 6 April 2026, a split that could trigger a rush to set up arrangements before any cutoff.
- Tax and HR advisers caution that a cap would remove a key tool for managing Employer NI costs, weaken recruitment packages, and complicate planning for families near the £100,000 childcare threshold.
- Green-policy advocates note salary sacrifice underpins EV uptake — an estimated 680,000 drivers and around 40% of BEV owners — and fear pensions curbs could presage wider limits, though some industry voices say EV schemes are signposted as supported through 2030.