{"id":158308,"date":"2025-11-02T05:45:13","date_gmt":"2025-11-02T05:45:13","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/158308\/"},"modified":"2025-11-02T05:45:13","modified_gmt":"2025-11-02T05:45:13","slug":"rachel-reeves-prepares-raid-on-pension-tax-perks","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/158308\/","title":{"rendered":"Rachel Reeves prepares raid on pension tax perks"},"content":{"rendered":"

Rachel Reeves<\/a> is reportedly preparing to target tax breaks on pension contributions in the Autumn Budget \u2014 a move that could raise up to \u00a34 billion for the government.<\/p>\n

The Chancellor is understood to be considering reforms to tax relief for workers and employers who pay into workplace pensions through \u201csalary sacrifice\u201d schemes.<\/p>\n

These schemes allow employees to make pension contributions before income tax<\/a> or National Insurance<\/a> is applied. However, critics warn that scrapping or restricting them could cost the average worker around \u00a3210 a year, according to The Telegraph.<\/p>\n

Large companies also benefit from the system through reduced National Insurance contributions. Ms Reeves is said to be weighing up a plan to limit the amount of tax-free income that can be placed into such pension pots.<\/p>\n

It would not be the first time the system has come under review, with HMRC<\/a> previously exploring potential reforms.<\/p>\n

Analysis earlier this year found that a worker earning \u00a335,000 and contributing 5% of their salary to a pension via salary sacrifice would face an additional \u00a3210 in National Insurance if the exemption were removed. Their employer would also lose around \u00a3242 if they matched the contribution.<\/p>\n

One option reportedly under consideration would be to cap the relief at \u00a32,000 per year \u2014 protecting average earners and their employers from higher National Insurance costs while limiting the benefit for higher earners.<\/p>\n

HMRC estimates that a worker on \u00a345,000 contributing 5% of their income would pay \u00a330 more in National Insurance under this model, while the employer would lose around \u00a334.<\/p>\n

Shadow Chancellor Sir Mel Stride said: \u201cIf Rachel Reeves really is planning to cap salary sacrifice relief, it\u2019s another reckless hit on business and jobs.<\/p>\n

\u201cStarmer and Reeves promised no more tax rises after their disastrous Budget last year \u2013 if they break their word again, the Chancellor has to go.\u201d<\/p>\n

Ms Reeves is seeking ways to close a \u00a340 billion shortfall in public finances, with Treasury insiders noting that National Insurance savings through salary sacrifice mainly benefit large employers because of the administrative costs involved.<\/p>\n

Data also shows that more than three-quarters of income tax relief from salary sacrifice goes to higher and additional rate taxpayers.<\/p>\n

The reports come as Reeves insists those with \u201cthe broadest shoulders\u201d should contribute more to help balance the books.<\/p>\n

However, some experts warn that cutting back the benefit could discourage saving for retirement.<\/p>\n

Sir Steve Webb, former pensions minister, said: \u201cPrevious governments have allowed salary sacrifice for pension contributions to encourage firms to provide good pensions.<\/p>\n

\u201cIf it was abolished it would penalise the best employers and make it less attractive to offer decent pensions. A more modest reform would be to cap the amount which can be sacrificed, and HMRC have tested employer opinion on this option as well.\u201d<\/p>\n

A Treasury spokesman said: \u201cWe do not comment on speculation around changes to tax outside of fiscal events.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Rachel Reeves is reportedly preparing to target tax breaks on pension contributions in the Autumn Budget \u2014 a…\n","protected":false},"author":2,"featured_media":158309,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[177],"tags":[79,18,15933,19,5233,17,13635,70024,234,235,12390,92156],"class_list":{"0":"post-158308","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-eire","10":"tag-hmrc","11":"tag-ie","12":"tag-income-tax","13":"tag-ireland","14":"tag-national-insurance","15":"tag-pension-contributions","16":"tag-personal-finance","17":"tag-personalfinance","18":"tag-rachel-reeves","19":"tag-salary-sacrifice"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115478522898928055","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/158308","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=158308"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/158308\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/158309"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=158308"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=158308"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=158308"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}