The salary sacrifice pension announcement in the Autumn Budget 2025
This will not come in to affect until April 2029 and we do not have full details of what this means. This is the announcement that there will be a cap of £2000 on employee salary sacrifice pension contributions, above this they will be subject to employee and employer National Insurance contributions. We have spotted a few areas that will need clarification:
What is the difference between salary sacrifice and employer’s contribution? Really these are the same but this means all Auto-Enrolment pension schemes are affected including those not based on salary sacrifice. Currently only employee salary sacrifice is listed so it could just be just those schemes that are impacted although that does not really make sense.
Do other salary sacrifice schemes impact the £2000 ceiling? Only pensions are specifically listed but the current guidance ends with comments about the increase in salary sacrifice schemes. This could get very complex so hopefully will be just pensions, especially as many other salary schemes are linked to a benefit in kind.
Will the normal rates apply and the employee NI category be taken into account? We cannot see why this would be different but maybe.
How will the excess be recorded and reported? We are sure this will fall into payroll and be reported via RTI. We obviously have no idea what this will look like.