Key Takeaway for April 2025
As Employer NI rates rise, the NI savings generated by salary sacrifice also increase. This creates a bigger incentive for employers to offer these schemes and potentially share those savings with you as extra pension contributions.
What is changing in April 2025?
Following the Autumn Budget, two major changes to Employer National Insurance Contributions (NICs) come into effect on 6 April 2025:
- Rate Increase: The main rate of employer NICs rises from 13.8% to 15%.
- Threshold Decrease: The secondary threshold (where employers start paying NI) drops from £9,100 to £5,000 per year.
While these changes increase the cost of employment for businesses, they also increase the “efficiency” of salary sacrifice arrangements.
How This Impacts Salary Sacrifice
When you sacrifice salary into a pension, neither you nor your employer pays National Insurance on that amount. Because the employer NI rate is increasing, the amount of tax saved on every £1,000 you sacrifice also increases.
| For every £1,000 sacrificed | Before April 2025 | From April 2025 |
|---|---|---|
| Employer NI Saving | £138 (13.8%) | £150 (15%) |
| Employee NI Saving (Standard) | £80 (8%) | £80 (8%) |
| Total NI Saving | £218 | £230 |
If your employer currently passes back their NI savings into your pension (a common benefit), you will see an 8.7% increase in the employer contribution amount for the same sacrifice.
What should you do?
- Check your scheme: Find out if your employer passes back their NI savings. If they do, your pension growth just got a boost.
- Review your contributions: Use our Salary Calculator to see how much you could save. If you are near a tax threshold (like the 60% trap at £100k), salary sacrifice is your best defense.
- Plan for 2029: While 2025 is good news, the government has flagged that from April 2029, they may cap the NI exemption on salary sacrifice at £2,000. Now is the time to front-load your contributions while the full exemption remains.
About This Article
Written by the Tax Trap Calculator editorial team · Published February 2026. Figures based on the 2024 Autumn Budget announcements. Source: HMRC Autumn Budget 2024 Analysis .