Chancellor Rachel Reeves is reportedly considering changes to salary sacrifice pension schemes in the upcoming budget, according to recent reports. The move would target employer contributions to employee pensions, potentially reducing the tax advantages currently available.
Salary sacrifice schemes allow employees to exchange part of their salary for non-cash benefits, such as increased pension contributions, which are not subject to income tax or National Insurance. Reeves is said to be examining these arrangements as a way to raise revenue.
One previously discussed option—reducing the tax-free cash lump sum that individuals can withdraw from their pensions—is now believed to be off the table. However, the chancellor has not confirmed or denied the speculation.
The Treasury has declined to comment on the reports, with a spokesperson stating that budget decisions are made closer to the announcement date. The budget is expected to be delivered later this year.
