Salary sacrifice into pensions above £2,000 will be taxed from 2029, the Chancellor has confirmed.

The schemes take money out of people’s pay packets before they are subject to tax.

At present there is no limit on the amount that an employee can put into their pension under salary sacrifice schemes before it becomes subject to national insurance.

But Rachel Reeves announced that from 2029 the amount of someone’s salary that can be sacrificed without incurring national insurance payments would be capped at £2,000 a year. The measure is expected to raise £4.7 billion in 2029–30.

Ms Reeves told the Commons: “I am introducing a £2,000 cap on salary sacrifice into a pension, with contributions above that taxed in the same way as other employee pension contributions.

“That is a pragmatic

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