HM Revenue and Customs (HMRC) has recently issued a timely reminder about the support available to taxpayers as the Self-Assessment deadline nears. With 31 January 2026 fast approaching, many businesses, sole traders and individuals are understandably starting to feel the pressure of meeting their tax obligations. To help manage this, HMRC is highlighting the Time to Pay service, which allows taxpayers to spread their Self-Assessment tax bill over a series of monthly payments rather than paying everything in one lump sum by the deadline.

This update is particularly relevant as nearly 18,000 Self-Assessment payment plans have already been set up since the start of the tax year on 6 April 2025. It shows that many taxpayers are finding the flexibility afforded by Time to Pay helpful as part of wider financial planning.

What is the Time to Pay service?

Time to Pay is not a new concept, but recent publicity from HMRC serves as a useful reminder of how it works and why it might be helpful. Broadly, the service allows taxpayers who cannot pay their Self-Assessment tax bill in full by the 31 January deadline to:

• Set up a tailored repayment plan, spreading their liability over monthly instalments.
• Avoid late payment penalties by agreeing terms that reflect what they can realistically afford.
• Make use of online channels to set up a plan for bills up to a specified threshold without needing to speak to HMRC directly.

For many taxpayers with bills of up to £30,000, a payment plan can be arranged online via the Government Gateway or the HMRC app as soon as their Self-Assessment return has been filed. This avoids the need to call or negotiate directly with HMRC in many cases.

If the tax owed is more than £30,000 or if a longer repayment period is needed, the taxpayer can still seek support, but they will need to contact HMRC directly to discuss and agree terms.

Why this matters now

The Self-Assessment system requires businesses and individuals to calculate and pay their tax liabilities by 31 January each year. While many taxpayers plan for this in advance, unexpected circumstances, rising costs or irregular income can make it hard to settle the tax bill in full by the due date.

By promoting Time to Pay, HMRC aims to encourage taxpayers to act early, rather than waiting and risking automatic penalties and interest. An agreed Time to Pay arrangement can minimise stress around the deadline and help taxpayers manage cash flow more effectively through the winter months.

It is important to note that interest on the unpaid amount continues to accrue during the repayment period, and taxpayers should plan accordingly. However, the interest charged under a structured plan is usually less onerous than the cumulative impact of penalties that would otherwise apply if payments were missed or late.

Simple Assessment and other reminders

In addition to the Time to Pay service, HMRC is also reminding customers who have received a Simple Assessment letter that they do not need to complete a full Self-Assessment return. Instead, these customers have three months from the date of their letter to pay any tax owed for the 2024 to 2025 tax year.

Simple Assessment is issued where income tax cannot be collected through Pay as You Earn (PAYE) by employers or pension providers, and it simplifies the process for individuals who have relatively straightforward tax situations.

Conclusion

HMRC's renewed emphasis on Time to Pay reflects an understanding that taxpayers often face real challenges in meeting lump sum tax obligations, especially in a period of ongoing cost pressures. Being aware of the support available and helping affected clients make the necessary arrangements sooner rather than later can make a meaningful difference to their financial wellbeing.

The recent Budget may not have delivered many dramatic headline changes, but as the detail settles, a number of important themes are beginning to emerge. Conversations with business owners suggest that concern is less about any single announcement and more about the combined effect of rising costs, higher personal tax exposure and increasing administrative demands.

These issues provide both a warning sign and an opportunity to plan more proactively.

Rising employment costs and staffing pressure

One of the most immediate challenges for many businesses is the rising cost of employing staff. Increases to minimum wage rates have a direct impact on payroll, but the wider effect often runs deeper. When entry level pay rises, expectations across the workforce frequently follow, leading to pressure on pay differentials and overall salary structures.

Employer National Insurance contributions and workplace pension costs continue to add to the total cost of employment. For businesses operating on tight margins, particularly in labour intensive sectors, this can quickly erode profitability. Some owners are already reviewing staffing levels, recruitment plans and working patterns to maintain control over costs.

Fiscal drag and higher personal tax bills

Another issue gaining traction is the continued freeze on income tax and National Insurance thresholds. As profits and salaries increase in line with inflation, more individuals are being pulled into higher tax bands without any meaningful increase in real income.

For owner managed businesses, this has a direct impact on decisions about salary, dividends and profit extraction. Dividend tax rates have risen in recent years; allowances remain static and the scope for tax efficient income planning has narrowed. The result is that after increases in remuneration, many business owners are paying more tax without a significant increase in take home pay (taxed earnings).

Fiscal drag can be easy to overlook, but over time it represents a significant and often underestimated increase in the overall tax burden.

Cash flow and financing costs

Higher interest rates continue to weigh heavily on businesses that rely on overdrafts, loans or asset finance. Even where inflation is easing, the cost of borrowing remains elevated, increasing monthly outgoings and putting pressure on cash flow.

Many business owners were looking to the Budget for measures that might ease short term funding pressures. In practice, most support is indirect, leaving businesses to manage higher financing costs alongside rising wages and operating expenses.

This has led some businesses to delay investment, hold back on expansion or prioritise cash retention over growth.

Investment decisions and uncertainty

Capital allowances and investment incentives still attract interest, but with growing caution. While reliefs can improve the tax efficiency of capital expenditure, uncertainty about how long they will remain in place makes long term planning more difficult.

Business owners are increasingly reluctant to base significant investment decisions solely on tax incentives that could change in future Budgets. Stability and predictability are now key factors in deciding when and how to invest.

Increasing compliance and administrative demands

Alongside cost pressures, businesses are also facing a gradual increase in administrative and reporting requirements. Developments such as the expansion of Making Tax Digital, Companies House reforms and enhanced transparency obligations all add to the compliance burden.

Individually, these changes may appear manageable. Collectively, they contribute to a sense that running a business is becoming more complex and time consuming, particularly for smaller organisations without in house finance teams.

A cumulative challenge rather than a single issue

What stands out following this Budget is not one specific measure, but the cumulative impact of multiple pressures moving in the same direction. Higher employment costs increased personal tax exposure, tighter cash flow and growing compliance requirements all reduce flexibility and increase risk.

This reinforces the importance of forward planning. Reviewing business structures, remuneration strategies, cash flow forecasts and investment plans can help you adapt to a more demanding environment and avoid reactive decision making.

How we can help

This is an ideal time to engage in meaningful discussions about your planning options. Small changes, implemented early, can often make a significant difference over time.

If any of these issues are affecting your business, please get in touch so we can help you review your position and consider the most appropriate next steps.

Many business owners reach a point where they begin to question whether the way their companies are arranged still suits their ambitions. Separate trading entities might have grown organically, acquisitions may have been made along the way or activities may have been kept apart for practical reasons. Over time, these associated companies can become difficult to manage as a whole. A group structure can therefore be an attractive way to bring order, improve tax efficiency and create a clearer long term strategy. The process is not as complex as many fear, although it does require careful planning to meet the legal and tax conditions needed for a clean reconstruction.

What a group structure achieves

A group structure allows the owners to place several companies under a single holding company. This creates a framework that links the entities while still preserving the limited liability of each. The holding company acts as the parent, which introduces the possibility of group tax reliefs, smoother dividend flows and better protection of assets. It also creates a tidier position for succession planning, investment and future exit options. For many owners, the appeal of a group is the sense that the business finally reflects its true scale, with the structure supporting the way the enterprise actually operates.

Improving the movement of funds

When associated companies are left separate, profits are locked within each company. This can restrict reinvestment because funds are not easily moved to where they are needed. A group structure can remove this constraint. Once the companies sit under a common parent, tax free dividends can be paid between members of the group. This allows one entity to support another without the friction of additional tax charges. It also improves the stability of the wider business because spare resources in one company can be redeployed quickly. For growth minded owners, this can be transformative.

Tax planning benefits

There are also clear tax planning advantages. Relief for losses is often one of the most immediate. Where a group exists, losses in one company can be set against profits in another, subject to standard rules. This can smooth tax liabilities and support companies that are either in early stage development or experiencing temporary cost pressures. Asset protection is another. High risk trading activity can be separated from valuable intellectual property or investment assets, which can sit in a different group company. If one part of the business experiences difficulties, the other parts may be better insulated from that risk.

How the reconstruction is carried out

Reconstruction tends to follow a familiar pattern. Usually, a new holding company is incorporated, and the shares of each existing company are transferred to it. In practice, the shareholders swap their shares in the old companies for shares in the new parent. If this is carried out correctly, the transaction can qualify for tax neutral treatment. The share exchange rules, together with the rules that apply to company reorganisations, allow ownership to be restructured without triggering capital gains or stamp duty charges. This is why professional advice is essential. The conditions must be met, and documentation must be prepared with precision.

Practical considerations to address

It is worth noting that liabilities, banking arrangements, contracts and licences may need to be updated. Banks often require new guarantees or revised facility letters. Landlords may need comfort that the covenant strength of the tenant is unchanged. Contracts that include change of control clauses must be reviewed, as the introduction of a holding company may trigger notification requirements. These matters are manageable, although they need to be handled with care so that business continuity is not disrupted.

Long term advantages of moving to a group

A group structure brings discipline and clarity. Owners gain a single place from which to view the business as a whole, which can lead to better decision making. Future investment rounds can be structured more easily because new investors can be brought into the parent company rather than individual subsidiaries. If an eventual sale is planned, a group can make it simpler to sell a division or ring fence a particular activity.

For many businesses, a group structure is a natural next step. It can unlock new opportunities, remove constraints and create a more resilient organisation. The key is to approach the reconstruction with a clear plan and good advice, so that the tax neutral status of the reorganisation is preserved. Once in place, the benefits tend to emerge quickly, and owners often wish they had acted sooner.

What the 2027 IHT change means

From 6 April 2027, the rules for passing on pensions after death will change in a way that affects many families. Under the government's reforms, most unused pension pots and pension scheme death benefits will be brought into the scope of Inheritance Tax, IHT. This represents a major restructuring of how pensions are treated on death and removes an exemption that many individuals have relied on for long term estate planning.

Historically, unused pension funds, particularly in defined contribution schemes or arrangements where pension trustees could exercise discretion, have been treated as outside the estate for IHT. This meant that large pension pots could be passed to beneficiaries without an IHT charge, even where the remainder of the estate exceeded the nil rate band. The government believes this has created an imbalance in the system, because pensions have increasingly been viewed as vehicles for passing on wealth, rather than purely as retirement income.

The new rules aim to correct this imbalance and create a more consistent approach across all pension types.

What is changing, and who is affected

From 6 April 2027 onwards, unused pension funds and most pension death benefits will be included within a person's estate for IHT calculations. This applies whether the benefits arise from a defined contribution plan, uncrystallised funds, unused drawdown balances or lump sums paid out following death.

There are very limited exceptions. The main excluded benefit is death in service cover that is paid from a registered pension scheme. These lump sum payments will remain outside the scope of IHT, so employees with this form of workplace protection will not see any change to the tax treatment of that particular benefit.

For most other pension pots, the value will now be treated in the same way as other assets, such as property, savings, or investments. Beneficiaries may therefore face an IHT bill where none existed before.

A key administrative point is that personal representatives, usually executors or administrators, will become responsible for reporting and paying any IHT due on pension assets. Earlier proposals suggested pension schemes might handle the payment; however, the government has confirmed that the responsibility will remain with the personal representatives. They will need to obtain valuations from pension schemes and include these figures when calculating the value of the estate.

Why the government is making this change

The government's stated position is that pension IHT exemptions have created distortions in long term financial behaviour. Because pension assets could be passed on free of IHT, individuals could preserve pension wealth for inheritance rather than draw on it for retirement. The government believes that removing the exemption will ensure pensions are used primarily for retirement income rather than as an inheritance strategy.

In addition, there has been inconsistency in how different pensions were treated for IHT. Some older schemes or non-discretionary arrangements were already subject to IHT, while modern discretionary schemes were not. Bringing all schemes into the IHT regime creates a more even system.

What this means for estate planning and advisers

For many families, this reform will require a reassessment of retirement and estate planning decisions.

Estates that previously fell within the IHT threshold may now exceed it once pension values are included, creating an unexpected tax liability for beneficiaries. Larger estates may see a significant increase in the total IHT due.

Executors will also face new responsibilities. They will need to identify every pension scheme the deceased belonged to, request valuations, establish whether death benefits are payable and include those values within the overall estate calculation. Where beneficiaries receive pension death benefits, there may be cases in which the IHT must be paid before the benefit can be accessed, unless the scheme agrees to withhold a portion of the fund and settle the tax on behalf of the estate.

Beneficiaries will also need to understand how the change affects them. In some situations, a beneficiary may become liable for an IHT payment before receiving funds, which can create a cash flow challenge. Advisers will need to help clients plan for this possibility.

Planning considerations for pension holders

Anyone with a significant pension pot should review their estate planning. Points to consider include:

* Assessing the total value of pensions and other assets, to estimate any future IHT exposure.
* Considering whether drawing down pension funds during retirement, in a measured and tax efficient manner, would reduce the IHT burden on beneficiaries.
* Reviewing wills, trust arrangements and pension expression of wish forms to ensure they reflect current intentions.
* Exploring the use of lifetime gifts, pension contributions, charitable gifts or other estate planning tools where appropriate.

The key message is that pensions can no longer be assumed to sit outside the scope of IHT. For many individuals, particularly those with substantial defined contribution savings, early planning may avoid both tax surprises and administrative complications for loved ones.

The proposed council tax surcharge on high value homes, due from April 2028, has triggered a lively and sometimes sharp response across the press. While the headlines have focused on the "mansion tax" label, the underlying commentary has been more nuanced, splitting broadly into three camps: those who see it as a modest step towards taxing wealth more fairly, those worried about complexity and unintended consequences, and those in the property world who fear it sends the wrong signal to investors and high earners.

What has actually been proposed

The Autumn Budget confirmed a High Value Council Tax Surcharge for residential properties in England valued at £2 million or more, with effect from April 2028. The charge will sit on top of existing council tax and will be levied on owners rather than occupiers. Current guidance suggests four bands, starting at £2,500 a year for homes between £2 million and £2.5 million, rising to £7,500 a year for properties valued above £5 million. The government expects fewer than 1% of homes to be affected, concentrated in London and parts of the South East.

Supportive commentary: a small but symbolic shift

On the centre left, commentators have largely welcomed the surcharge as a cautious move in the direction of wealth taxation. One prominent Guardian piece described the measure as a "small but brave step", arguing that raising around £400 million a year is less important than establishing the principle that expensive property should contribute more to local finances and public services.

Supportive articles tend to present the surcharge as a way to rebalance a system that has left long term property wealth relatively lightly taxed compared with earnings. They also note that the charge arrives at a time when broader Budget measures, including other tax rises, have drawn criticism for hitting working households. In that context, asking owners of £2 million plus homes to pay a few thousand pounds more each year is framed as politically and socially defensible.

Critical voices: valuation headaches and fairness concerns

By contrast, the Financial Times and other business focused outlets have highlighted practical and administrative risks. The Valuation Office Agency is already under pressure dealing with council tax and business rates disputes. Experts quoted in the financial press warn that identifying which properties fall above the £2 million threshold, particularly in areas where comparable sales are rare, could trigger a wave of appeals and strain an already stretched system.

There are also questions of fairness and regional impact. Some commentators point out that a fairly ordinary family house in parts of London may now trip the £2 million line, while far grander properties elsewhere in the country remain outside scope. This has prompted familiar worries that the policy could deepen a perceived London focus on tax design, even if only a small proportion of households are affected.

More broadly, several economic commentators have grouped the surcharge with a wider set of tax rises and freezes, warning that the overall package may act as a drag on growth and household living standards through to the end of the decade.

Property industry reaction: wary rather than panicked

Within the property industry, reaction has been wary but not apocalyptic. Trade press coverage talked of an "apprehensive" sector that had long expected some form of mansion tax, and which now regards the final design as less aggressive than feared.

At the same time, agents and landlords have warned that the measure could undermine sentiment at the top end of the market, especially when taken alongside other changes affecting landlords and higher rate taxpayers. Industry bodies note that the surcharge lands in 2028, by which time interest rates and house prices may have moved again, and suggest that the reputational signal, that the UK is becoming a higher tax environment for wealth holders, may matter as much as the direct cash cost.

Interestingly, early market data suggests that the announcement has not derailed the wider housing market. Nationwide, for example, has reported modest house price growth and emphasised that fewer than 1% of homes are in scope, meaning the broader market is unlikely to be affected in any material way.

Where does this leave homeowners and advisers

Taken together, the press reception paints the surcharge as a politically significant but fiscally modest measure. Supportive commentators see it as the thin end of a wedge that could, in time, lead to more comprehensive taxation of property wealth. Critics fear it adds yet another layer of complexity to a tax system already full of thresholds, bands and cliff edges, and may unsettle a small but economically influential segment of homeowners and investors.

For advisers and their clients, the message from the press is clear enough. This is not a mass market tax. However, for those with property interests at or above the £2 million threshold, it is another reason to review longer term plans, consider how assets are held, and keep a close eye on valuations as the Valuation Office Agency begins its work.

From 1 December 2025 the UK deposit protection rules will shift in a way that will matter for many savers, especially those holding larger balances or receiving significant one-off payments. The Financial Services Compensation Scheme is increasing the maximum protection for eligible deposits held with UK banks, building societies and credit unions. The long-standing limit of £85,000 per person per authorised firm will rise to £120,000. The protection for temporary high balances will also increase, moving from £1 million to £1.4 million, with cover lasting for up to six months.

These changes follow a review of the scheme that considered the erosion of real value caused by nearly a decade of inflation. The previous limit had not changed since 2017. As prices, house values and average cash holdings increased, the £85,000 cap covered a smaller and smaller proportion of typical savings. The new figures are intended to restore the original level of protection and maintain confidence in the financial system.

Why the changes matter for savers

For everyday savers, the increased limit means a larger share of their money is fully protected if their bank were to fail. While bank collapses remain rare, the reassurance of compensation has always been a central part of financial stability. Raising the limit helps ensure that savers do not have to worry unnecessarily about the safety of ordinary cash deposits.

The updated rules on temporary high balances are important as well. Life events often lead to large short-term cash holdings. A house sale, a divorce settlement, an inheritance or an insurance payout can all result in six figure sums sitting temporarily in a bank account while the individual decides what to do next. Under the previous rules the protection for these situations was capped at £1 million. The move to £1.4 million brings that figure closer to the current value of many property transactions and gives people more time and confidence to organise their finances.

How the protection works in practice

The £120,000 limit applies per person per authorised institution. If you have several accounts with the same bank, and that bank operates under a single licence, all balances are grouped together for the purpose of the protection calculation. Joint accounts are covered per individual, so a joint account held by two people could receive protection up to £240,000 in total.

The temporary high balance protection operates slightly differently. It applies only to specific types of transactions such as proceeds from property sales, inheritances and insurance claims. The money must have been received within the past six months, and the individual must be able to show the source of funds. The protection is automatic, but it is time limited. After six months the standard £120,000 limit applies.

For most people, the process in the event of a bank failure is straightforward. The Financial Services Compensation Scheme normally refunds protected deposits within seven days. You do not need to make a claim or fill in forms. The system is designed to be fast and automatic.

Practical things to consider

One point that often surprises savers is that well known banking brands can share the same banking licence. This means the £120,000 limit applies to the group as a whole rather than to each brand. It is worth checking which brands belong to which authorised firm if you hold more than £120,000 across several accounts. Splitting money between institutions with separate licences can provide greater protection.

The increase in the limit will mean that many savers who currently split modest sums between two or three banks may find they no longer need to do so purely for safety reasons. Even so, some individuals prefer to spread funds for convenience or organisational reasons, for example separating savings for different goals across different accounts. The higher limit does not remove these preferences; it simply reduces the pressure to do so for safety alone.

For people expecting a large one-off payment, the new temporary high balance protection provides breathing space. Rather than rushing to move or invest the money within a few days, individuals have up to six months to decide how best to use the funds while still enjoying a significant level of protection.

Conclusion

The increase in the UK deposit protection limits is a welcome modernisation of a long-standing safeguard. It restores the real value of protection that had been steadily eroded and gives savers greater confidence that their money is safe. The change is sensible, proportionate and aligned with current financial realities. For individuals and small businesses alike, it reduces anxiety and provides more flexibility, especially around major financial events that temporarily increase cash balances.

Artificial intelligence (AI) writing tools, such as ChatGPT, Gemini, and Claude, have become extremely popular. They can create emails, write marketing content, and debug code quickly. Many people think these tools could replace traditional editing tools. A spell checker, once a key part of word processors, might seem unnecessary now that AI can rewrite a paragraph with correct grammar and style.

It would be a mistake to get rid of human-verified editing tools. Current AI services are strong suggestion engines, but they are not always correct or truthful. If you rely only on AI for accuracy, you could make significant errors that a basic spell checker would easily catch.

The Problem with "Hallucinations"

A main issue with current AI models is "hallucination." AI predicts the most likely next word in a sequence. This usually results in fluent, relevant text. However, when the model lacks information or the prompt is unclear, it creates believable-sounding falsehoods.

A standard spell checker checks if a word is in the dictionary and used correctly. An AI might "correct" a technical term to a common synonym, which changes the meaning of a sentence. It might make up statistics, quote sources that do not exist, or include names of people who were not involved in an event. These errors often sound correct but are factually wrong.

Context is Key (and AI Can Miss It)

Consider a business communication where a specific internal acronym is vital. A traditional spell checker might flag the acronym but offers the simple option to "Add to Dictionary." An AI, trained on large public datasets, might try to "fix" that unique term with a generic, incorrect replacement because it's unfamiliar with a specific context.

AI also struggles with nuance, tone, and the legal or compliance requirements of specific industries. A human editor or a dedicated, rule-based editing suite understands the fixed rules of internal policy or legal jargon.

A Powerful Partnership, Not a Replacement

AI is a strong first-draft generator and brainstorming partner. It speeds up the creative process and helps with writer's block. However, it does not replace the crucial final step of human review and verification.

Use AI as a smart assistant, not the editor-in-chief. Keep traditional spell checkers, grammar tools, and critical thinking skills sharp. The best method in 2025 is not AI instead of spell check; it's AI plus careful human oversight. Do not get rid of a spell checker; it's the last defence against convincing, and incorrect AI output.

1 December 2025 - Due date for Corporation Tax payable for the year ended 28 February 2025.

19 December 2025 - PAYE and NIC deductions due for month ended 5 December 2025. (If you pay your tax electronically the due date is 22 December 2025).

19 December 2025 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2025. 

19 December 2025 - CIS tax deducted for the month ended 5 December 2025 is payable by today.

30 December 2025 - Deadline for filing 2024-25 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2026-27.

1 January 2026 - Due date for Corporation Tax due for the year ended 31 March 2025.

19 January 2026 - PAYE and NIC deductions due for month ended 5 January 2026. (If you pay your tax electronically the due date is 22 January 2026).

19 January 2026 - Filing deadline for the CIS300 monthly return for the month ended 5 January 2026. 

19 January 2026 - CIS tax deducted for the month ended 5 January 2026 is payable by today.

31 January 2026 - Last day to file 2023-24 self-assessment tax returns online.

31 January 2026 - Balance of self-assessment tax owing for 2024-25 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2025-26.

A demerger involves splitting the trading activities of a single company or group into two or more independent entities. This can be facilitated by distributing the assets of a holding company to its shareholders.

There are special statutory demerger provisions that are designed to make it easier to divide and put into separate corporate ownership the trading activities of a company or group of companies. An exempt demerger will be deemed to occur under these provisions. As a result, the distribution is typically exempt from Income Tax and usually does not trigger any Capital Gains Tax, as the gains are effectively rolled over.

The provisions do not apply where a trading activity is to be sold or becomes owned by a person other than the existing member of the original company.

The provisions allow for the removal of the distribution charge in appropriate circumstances, making the distribution an 'exempt distribution'. This applies to trading activities only. Companies that utilise the demerger provisions range from small private businesses to some of the largest public companies in the UK.

The legislation also provides for a clearance procedure. Under this a company that wants to demerge trading activities can obtain advance confirmation from HMRC that the distribution that will arise will be an exempt distribution.

The Chancellor has kept the main pension allowances unchanged but has confirmed a new cap on salary sacrifice arrangements that will apply from April 2029.

There had been heated speculation that the Chancellor would change the pension rules to help the government raise taxes, but no changes were announced to the annual allowance (which remains at £60,000) or to the carry-forward rules which can use up previous year's annual allowances. The lump sum allowance has also remained unchanged at £268,275.

However, the Chancellor announced changes to the salary sacrifice arrangements for pension contributions. Salary sacrifice allows employees to reduce part of their salary or bonus in exchange for pension contributions, which is tax-efficient and helps save for retirement. However, this arrangement has disproportionately benefited higher earners with salary sacrifice costs expected to rise from £2.8 billion in 2016-17 to £8 billion by 2030-31.

From April 2029, the government plans to introduce a cap on salary sacrifice contributions which will limit the amount that can be sacrificed without incurring National Insurance Contributions (NICs) to £2,000 per employee. Salary sacrifice contributions above this amount will be subject to employer and employee NICs. Pension contributions that are not part of a salary sacrifice will remain unchanged.

The Chancellor reaffirmed the government's commitment to maintaining the Triple Lock on the State Pension throughout this parliament. This means that in April 2026, the State Pension will increase by 4.8%. The Triple Lock ensures that the State Pension rises by the highest of three measures: inflation, wage growth, or 2.5%, helping to protect pensioners' income against rising costs of living.

Also, starting from 6 April 2027, the government will close a loophole that allows individuals to use pensions for inheritance tax (IHT) planning. Under the new rules, any unspent pension pots will be brought within the scope of IHT.