Scrapping salary sacrifice would 'send wrong message'
Scrapping salary sacrifice, rumoured to be part of the 8 July Budget, would do more harm than good but is likely to be high up on the Chancellor's agenda, providers have said.
Salary sacrifice, where employees give up part of their salary in exchange for other benefits including pension contributions, currently costs the government about £15bn a year.
The benefit means as workers earn a lower salary both the worker and their employer pay lower National Insurance (NI) contributions. Employers can pay part or all of the NI saving into the worker's pension, but it is not mandatory.
Ex-pensions minister Steve Webb believes the tax break could be scrapped by the government in next week's summer Budget.
Speaking earlier this month, he said it would be very surprising if the Treasury was not looking at the possibility of money saving through the removal of salary sacrifice.
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