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From 6 April 2029 pension contributions made by salary sacrifice above £2,000 a year carry employee and employer National Insurance.
Published 3 November 2026
All articlesFrom 6 April 2029, pension contributions made through salary sacrifice above £2,000 a year become liable to employee and employer National Insurance. The change was announced at Budget 2025, and the detailed design will follow in secondary legislation.
A salary sacrifice is "an agreement to reduce an employee's entitlement to cash pay, usually in return for a non-cash benefit". The employer "must ensure that the salary sacrifice does not cause a worker's pay to drop below minimum wage rates". For most hospitality staff paid at or near the National Living Wage, salary sacrifice is not available, so the change falls on managers, head chefs and owners.
Schemes set up now keep their full National Insurance saving until 5 April 2029. Plan the amounts each person sacrifices for the years after that.
We run salary sacrifice in payroll, check every sacrifice against the minimum wage, and model the 2029 cost for each manager. See payroll, tips and tronc.
No. The employer must make sure it does not take a worker's pay below minimum wage rates.
It was announced at Budget 2025, with the detailed design to follow in secondary legislation.
Send us your last accounts, a recent VAT return and one payroll run. We will show you what we would change and what it would cost each month.