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\t\tSalary sacrifice legislation is set to be rushed through Parliament\t<\/p>\n\t\t\tFriday 28 November 2025 7:43 am
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\t\t\tFriday 28 November 2025 11:24 am\n\t<\/p>\n
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\t\tSalary sacrifice legislation is set to be rushed through Parliament\t<\/p>\n
Chancellor Rachel Reeves is to rush through laws to enact her Budget, in a bid to reassure nervous markets that tax increases will be implemented even if they are not set to take effect for several years.<\/p>\n
Legislation to raise tax on pension contributions made through\u00a0salary sacrifice schemes\u00a0is expected to be introduced before Christmas, according to reports in the Financial Times, despite the changes not being applied until April 2029.<\/p>\n
Salary sacrifice schemes allow workers to take a pay cut in return for higher pension contributions, and are particularly popular for workers with young families who wish to stay under the \u00a3100,000 threshold to keep their free childcare hours.<\/p>\n
But in a shake-up to the pensions system, salary sacrifice schemes have been pared back, with the exemption capped at \u00a32,000 per employee, per year, from April 2029, arguing that the scheme does not benefit those on the minimum wage.<\/p>\n
The raid is expected to raise \u00a34.8bn in the 2029 to 2030 financial year, with an additional \u00a32.5bn the following year.<\/p>\n
\t\tDon\u2019t lose your nerve<\/p>\n
While Budget measures are typically enacted through a general finance bill, a separate piece of legislation covering the national insurance change will be introduced in the \u201cnext few weeks\u201d, a Treasury official reportedly said.<\/p>\n
One minister said, \u201cWe want markets to know this is all definitely happening, there can be no doubt about that.\u201d<\/p>\n
Reeves is also looking to legislate quickly to close a loophole on \u201clow value imports\u201d, which online retailers use to ship low-value goods into the UK free of tariffs, despite the changes not due to take effect until April 2028.<\/p>\n
A Treasury official said: \u201cWe\u2019ve got to get this right, but if we can do it earlier, we will.\u201d<\/p>\n
\t\t\t\t\tRead more<\/p>\n
\t\t\tReeves eyes clampdown on salary sacrifice in latest stealth tax on high earners<\/a><\/p>\n Ministers noted the plan had always been to pass early legislation to enact the Budget, in order to ensure shaky markets did not lose their nerve on tax rises ahead of the general election, which must happen by summer 2029.<\/p>\n Who does it benefit?<\/p>\n Approximately 7.7bn workers use salary sacrifice<\/a>, with employees of most of Britain\u2019s largest employers taking advantage of the scheme.<\/p>\n Industry figures have voiced confusion over the Treasury\u2019s decision to strip away an incentive that encourages increased pension saving at a time when the country is experiencing a retirement crisis.<\/p>\n However, it is said that Reeves argued that the system\u2019s design ultimately does not assist basic taxpayers, noting that it mainly benefits high earners, in particular \u201cthose in the financial services sector putting their bonuses into pensions tax-free\u201d.<\/p>\n A Treasury official said: \u201cThese reforms will protect low and middle earners and bring fairness to a scheme that is disproportionately benefiting the wealthy and exploding in cost.\u201d<\/p>\n