Changes to Salary Sacrifice

Many employees take advantage of salary sacrifice schemes that enable them to forego some of their salary or bonus for certain employment ‘perks’, childcare vouchers or employer pension contributions.  By sacrificing salary for additional pension contributions, both the employee and the employer are able to save the National Insurance Contributions that would have been due on the salary pre-sacrifice. 

From April 2029, employees will only be able to save National Insurance on the first £2,000 of sacrificed salary.  Any pension contributions made through salary sacrifice in excess of £2,000 will be subject to both Employee and Employers National Insurance.

If cash requirements permit and salary sacrifice schemes are open to you in your employment, you are still able to benefit from these schemes for the next few years.  Consider sacrificing part of your salary or bonus for additional pension contributions to receive income tax relief (which will remain) and National Insurance exemptions until the end of the 2028/29 tax year.