#2026/15National Insurance on Salary-Sacrificed Employer Pension Contributions
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
This law allows National Insurance contributions to be charged on salary that employees give up in exchange for employer pension contributions under salary sacrifice arrangements. The change applies across the UK from the 2029-30 tax year. Employers using pension salary sacrifice schemes will need to adjust payroll and benefits systems once the detailed regulations are made. The first rules must protect the first £2,000 a year of sacrificed pension contributions from being treated as earnings for National Insurance purposes.
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Key Changes
- Allows salary sacrificed for employer pension contributions to be treated as earnings for National Insurance purposes
- Applies from the 2029-30 tax year across Great Britain and Northern Ireland
- Requires the first regulations to exempt up to £2,000 per tax year from this treatment
Obligations
What this law requires
Employers operating pension salary sacrifice or other optional remuneration arrangements must be prepared to treat sacrificed salary for employer pension contributions as employment remuneration for National Insurance purposes where regulations made under the Act require this treatment.
Employers must ensure payroll calculations exclude sacrificed pension contribution amounts up to the statutory contributions limit from being treated as National Insurance remuneration.
Employers must apply the first statutory contributions limit of £2,000 per tax year when determining the portion of sacrificed pension contributions protected from National Insurance treatment, subject to any equivalent limits prescribed for weekly or other pay intervals.
Payroll systems must be capable of applying prescribed timing rules for when any sacrificed pension contribution amount treated as remuneration is deemed paid to or for the benefit of the employee.