Rachel Reeves has found a new way to tax work: call it “pension reform”, then quietly slap National Insurance on the very mechanism millions use to save for retirement.
HMRC now admits that once her £2,000 cap on salary sacrifice kicks in from 2029, around 2.9–3.3 million workers will respond by cutting back pension saving, including roughly 666,000 basic‑rate taxpayers earning under £50k.
The Treasury still spins this as a clampdown on “high earners piling cash into pensions without paying a penny in tax” – but their own FOI figures show the majority of those scaling back are higher‑rate taxpayers while hundreds of thousands on ordinary salaries lose the NI advantage too.
Meanwhile, most of the £4.8–£5bn haul is expected to come from employers, who’ll now pay full NI on sacrificed pay above the cap – a straight tax on jobs and pay packets dressed up as fairness. If this is what Labour calls “rewarding work”, what does punishing it look like?