The impact of the Autumn 2025 Budget on Pension Salary Exchange

From April 2029, salary exchange pension contributions will be capped at £2,000 per year.

In the 2025 Autumn Budget, the Chancellor stated that “payments above the cap will be taxed in the same way as other employee pension contributions”, which may cause some confusion.

Salary exchange (also referred to as salary sacrifice) does not offer extra tax advantages compared to contributing from net income; it is simply a more efficient mechanism.

Contributions within the annual pension allowance will still receive tax relief. The key change is that National Insurance (NI) relief will no longer apply to contributions above the £2,000 cap.

Find out more about salary exchange and how it will be impacted by the Autumn Budget. Read the full guide here.