Autumn Budget 2025: What it means for salary sacrifice, cash savings and your team
The Autumn Budget introduces changes that will reshape how your team saves - from a new cap on pension salary sacrifice to a lower limit on tax-free ISA contributions.
You might’ve seen the headlines, but most of the changes aren’t happening overnight. The ISA allowance drops in 2027, and the pension salary sacrifice cap won’t come into effect until 2029. That gives employers a valuable window to make the most of the current National Insurance (NI) savings, while laying the groundwork for what comes next.
Here’s what you need to know about the Budget changes and how Thrive can help.
The headlines
New cap on pension salary sacrifice from 2029
From 2029, there’ll be a £2,000 annual cap on how much salary can be sacrificed into a pension before employee and employer National Insurance (NI) is applied.
- The cap applies to pension salary sacrifice only.
- Income tax relief isn’t changing.
- For most lower earners contributing 5%, the impact will be small.
- Higher earners contributing more will lose some NI savings above £2,000.
- You can still contribute above the cap - it just won’t save NI.
Other benefits aren’t affected
Salary sacrifice for other benefits, such as EV schemes or Cycle to Work, will stay the same. No cap, no changes. If you offer these benefits, now’s a good time to make sure they’re visible and well understood.
Tax free cash ISA allowance drops to £12,000
The amount you can save, from April 2027, in tax-free cash ISA has been slashed from £20,000 to £12,000 in the Budget. However, this will not affect over-65s, who will be allowed to stick to the £20,000 limit. For those under the age of 65, it could see many turn to Stocks and Shares ISAs as the slashed £8,000 tax free is still available there.
The catch? Many people don’t know how to access them or what they actually offer. Helping your team understand the difference - and where Stocks and Shares ISAs fit into their financial plan - will matter more than ever.
What this means for employers
You’ve got time to prepare - but acting early will pay off.
With the ISA limits not changing until 2027, and the salary sacrifice cap not coming into effect until 2029, now’s a great time to:
Make the most of today’s salary sacrifice NI efficiencies
Nothing changes yet so it’s worth checking your salary sacrifice setup is working as it should within the current rules.
Communicate clearly with your team
They’ll want to know:
- What’s changing
- When it’s changing
- If they’re affected
- What they can do
Clear, proactive comms will go a long way.
Review your pension and benefits setup early
Looking at contribution structures, benefits uptake and financial wellbeing tools now means fewer headaches later.
Understand who might be affected
Higher earners, or those contributing more than 5%, may lose some NI savings from 2029. Spotting that group early helps with budgeting, planning and engagement.
Get payroll ready ahead of time
Updating systems before the deadline means less pressure, and fewer errors, when the changes go live.
How Thrive can help
These changes are a chance to modernise your approach. Thrive helps you make the most of what’s available now - and get ready for what’s next.
1. Maximise today’s salary sacrifice rules
We help your team understand their pension, boost engagement and access expert coaching so they can make confident choices while full NI savings still apply.
2. Get future-ready for 2027 and 2029
Our free Workplace Pensions & Benefits Health Check gives you:
- A clear view of how your pension scheme is performing.
- Insight into who’ll be affected by the changes.
- Modelling of the impact across your team.
- Recommendations for a future-ready benefits and pension strategy.
- Support with communications and rollout.
3. Keep engagement high through change
Our app brings pensions, ISAs, benefits and coaching into one place. It’s personal, practical and easy to use so your team stays informed.
4. Simplify admin as rules evolve
We help reduce the admin burden of adapting to the new rules by making compliance, reporting and communication simpler for your HR teams.
Why now is the time to act on Salary Sacrifice
The salary sacrifice changes might not take effect until 2029 - but the opportunity to save is here right now. While the current rules are still in place, both you and your team can benefit from full NI relief on pension contributions. For employers, that means a direct cost saving every month.
Here is what those savings might look like for your business:
Assumptions used in this calculation:
- Employer NIC rate: 15%
- Employer NIC threshold: £5,000
- Pension contributions are based on gross salary
- All employees earn the average salary specified
- Employer retains 100% of NIC savings
Important disclaimer:
This calculation provides a high-level estimate for employer NIC savings through salary sacrifice. It does not factor in individual employee tax codes, higher-rate tax thresholds, tapered annual allowance, or other adjustments that may apply to high earners. Actual savings may vary. Tax Rules in Scotland may differ. This is not financial advice.
Want to make the most of today’s rules and feel confident about what’s coming?
Our team’s here to help you navigate the changes, support your team and strengthen your pension and benefits strategy.
