NICs Bill 2026. Uncertainty over how salary sacrifice cap will apply across multiple employments.

On 24 February 2026, the UK House of Lords held the committee stage of the National Insurance Contributions (Employer Pension Contributions) Bill, a proposal that is already raising significant questions among policymakers, businesses, and employees. While the main objective of the bill is to regulate employer pension contributions and limit certain forms of tax optimisation, the discussions revealed important unresolved issues, particularly regarding how the salary sacrifice cap will apply to individuals with multiple employments.

The salary sacrifice scheme allows an employee to agree with their employer to reduce their gross salary in exchange for non-cash benefits, most commonly increased pension contributions. This arrangement is attractive because it reduces both employee and employer National Insurance contributions. For this reason, the government is now seeking to introduce a cap to limit excessive use of this mechanism.

However, a key issue remains unresolved: how this cap should be applied to individuals who work for more than one employer. It is currently unclear whether the cap will be applied separately to each employment or calculated across an individual’s total income. If applied per employer, individuals could potentially benefit from the cap multiple times, reducing the intended impact of the reform. On the other hand, applying a single cap across all employments would create significant administrative challenges, as it would require coordination of data between different employers and the tax authority.

During the discussions, particular attention was given to the impact on basic-rate taxpayers. Concerns were raised that the proposed changes may disproportionately affect this group. Since salary sacrifice is often used as a tool for efficient pension saving, limiting it could reduce incentives to contribute to pensions and lower employees’ net financial benefits.

Another important issue highlighted was the potential unintended consequences for individuals with student loan repayments. Because salary sacrifice reduces official earnings, it can lower student loan repayments. Introducing a cap may increase reported income for some individuals, leading to higher repayment amounts than expected. This could result in financial surprises for those who have structured their finances based on the current system.

Administrative complexity is also a major concern. If the cap is applied across total income, employers would face challenges in sharing and accessing accurate data, while the tax authority would need to ensure real-time tracking of individuals’ earnings across multiple jobs. This would increase both compliance burdens and the risk of errors.

At present, the bill remains under consideration, and key decisions have yet to be made. Further clarification is expected, and some aspects of the proposal may still be revised to address the concerns raised. Nevertheless, it is already clear that the changes could have a significant impact on both employees and employers.

Given the current uncertainty, it is important for individuals and businesses to stay informed and assess the potential financial implications. Although the final structure of the reform is not yet confirmed, it signals a move towards tighter control over tax planning strategies and may fundamentally reshape how salary sacrifice arrangements are used in the future.