Featured by the Telegraph, The Sun, GB News and other publications, Freedom of Information data obtained by Bowmore Wealth Group has revealed that workers may face an additional £468m a year in National Insurance contributions following Labour's decision to cap National Insurance relief on salary sacrificed pension contributions at £2,000 a year, above which contributions remain permitted and continue to receive income tax relief, but no longer escape NICs..
The cap was announced by former Chancellor Rachel Reeves and is due to come into force in April 2029. Whilst businesses are expected to bear the larger share at approximately £3.05bn, the FOI breakdown shows workers could absorb the remaining £468m through increased deductions on their payslips.
The Office for Budget Responsibility estimates the Treasury could collect approximately £4.8bn in additional revenue in the first twelve months after the cap takes effect, including approximately £1.4bn in additional income tax receipts.
Gill Millen, Head of Corporate Benefits at Bowmore Financial Planning , said:
"This is an immediate income tax boost for the Treasury and then it's a fingers-crossed moment, hoping that a lot of people might not get around to claiming what is theirs."
Gill Millen added:
"We could see a lot of ordinary workers actually reduce their future pension potential as a result of this policy.
For those currently using salary sacrifice arrangements, reviewing their pension strategy ahead of April 2029 may be an important step in seeking to protect their long-term financial future.
The Telegraph: Workers face £468m hit from Labour’s salary sacrifice tax raid
The Sun: Workers face being £100s worse off under Labour’s salary sacrifice raid – see when you could be hit
GB News: Pension tax raid to cost British workers £468million as HMRC raid looms
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