HMRC warning over new £2,000 cap - 3.3million pension savers hit

Millions of workers across the UK are set to lose a key pension tax perk under new Government rules that will limit National Insurance (NI) savings on salary sacrifice contributions. Changes confirmed in the 2025 Autumn Budget mean that from April 2029, only the first £2,000 of employee pension contributions made through salary sacrifice will be exempt from NI. Anything paid above that threshold will attract both employee and employer National Insurance.

The reform is expected to affect around 3.3 million people who currently contribute more than £2,000 a year via salary sacrifice. Salary sacrifice allows workers to exchange part of their gross pay for employer pension contributions before tax and NI are calculated.