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Rachel Reeves is preparing to tighten the rules on salary sacrifice schemes, it has been warned. As it stands, employees and employers avoid national insurance on income diverted into pensions through salary sacrifice arrangements.

But, under the new plans, that exemption would be capped at £2,000 per employee per year, meaning any further pension contributions would be subject to standard NI rates of eight per cent for most workers and two per cent for higher earners.

The Labour Party Chancellor could bring in the changes in her Autumn Budget on November 26. Financial expert Nick Sudbury at Fidelity International said: “Many employees choose to ‘sacrifice’ part of their salary in exchange for higher contributions into their workplace pension.

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