28 May 2025
HM Revenue and Customs (HMRC) commissioned IFF Research to understand how employers were using salary sacrifice arrangements for pensions. The research also posed hypothetical changes to how the tax reliefs for salary sacrifice could be operated to gauge how this would impact their use.
The Hypothetical scenarios were:
- Removal of the National Insurance (NI) exemptions for employees and employers
- Removal of the NI exemption for employees and employers and the tax exemption for employees
- Removal of the NI exemption but only above a £2,000 per year threshold
You can read the full report and findings here.
The conclusion states that all options were viewed negatively by employers, but to differing extents. Additionally, “employers indicated that changing the pension system could inevitably cause confusion and risk people becoming more disengaged with pensions.”
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