3 Million Workers To Be Hit With Salary Sacrifice Cap

Last week, Chancellor Rachel Reeves confirmed in the Autumn Budget that Salary Sacrifice would be capped (where employeers give up salary (saving income tax and employees national insurance contrubutions [NIC]) as well as Employers saving on employers NIC, by paying that salary sacrificed plus any employer NIC savings in to their employees pensions as additional employer contributions.

This reduces both the income tax and national insurance take for the Government and Chancellor confirmed this would be capped at £2,000 pa from April 2029.

See: Budget 25 Pensions

Steve Webb, former Pensions Minister, now working in the pensions industry, has suggested that this could affect 3 million workers and is a ‘backwards step’ in trying to encourage people to save for retirement.

Comment

And the Labour Party manifesto said it would not increase taxes for working people …

• A salary sacrifice cap hits working people.
• Minimum wage increases hits work people who have employees.
• Employers national insurance contributions hits working people that have employee.
• Dividend tax increases hits working people that have limited companies and can only pay themselves via dividends when profits for the year are known.
• Rental profit tax increases will no doubt be passed onto tenants, again hitting working people.

We have no problem with the government’s need to raise tax revenue for government spending on the NHS, Social Care and Education but whey are non-working, benefits claimants getting inflation busting pay rises and hard working people are paying ever more taxes?  The burden should be shared by all.