Budget Day

[jamesbrown]

When this was first mentioned, I wondered what there is to stop a company having a range of employment contracts with different pension contributions and salary levels but not actually constituting SalSac.

Many companies where I've worked have had workers on 'personal contracts' at senior levels and a general contract for others. Maybe pension contribution rate will become a differentiating criteria for selecting an employer or umbrella company (later there would presumably be a Pension Charge variant of the Loan Charge!)

Of course, those with LtdCos can still pay whatever they want as pension contributions, so that the 'outside' contract becomes even more valuable.

I'm sure there will be attempts. However, among other things, there is ITEPA Part 3 Ch. 2 69A, also known as the Operational Remuneration Agreement (OpRA) rules. Some background here:

https://www.gov.uk/hmrc-internal-man...anual/eim44010

This is an anti-avoidance measure designed to prevent someone from foregoing salary for a tax advantage, except for a small list of approved purposes, such as a pension contribution (which will disappear in 2029, above a threshold amount). The effect is to apply the higher rate of tax that would otherwise have been due. Any conspiracy to circumvent the new SalSac rules will need to get around OpRA on the tax side, as well as any employment law implications.

[Protagoras]

I'm sure there will be attempts. However, among other things, there is ITEPA Part 3 Ch. 2 69A, also known as the Operational Remuneration Agreement (OpRA) rules. Some background here:

Thanks for sharing, I'd not come across this.
I predict lots of private-sector retirements in 2029.

[willendure]

So the pension changes are targeting SalSac only. Bad news for regular employees (inc. umbrella employees), but no changes to employer contributions more generally.

For real? Can someone doing SalSac not switch things around and do it as an employer contribution instead? Obviously needs the employer to play along but in theory at least?

[Protagoras]

For real? Can someone doing SalSac not switch things around and do it as an employer contribution instead? Obviously needs the employer to play along but in theory at least?

Apparently not, since this would fall foul of Operational Remuneration Agreement (OpRA) rules as per the post from jamesbrown above.
Bye bye brollies.

[jamesbrown]

For real? Can someone doing SalSac not switch things around and do it as an employer contribution instead? Obviously needs the employer to play along but in theory at least?

Not easily because there are anti-avoidance rules on the tax side, with a narrow carve out for the existing SalSac arrangements that will disappear, and issues on the employment law side too w/r to contract variations, and that's assuming you have an employer that wants the same thing (perhaps more likely for an umbrella than a regular employer, but the hoops are probably too great - we'll see how it pans out, though, and it doesn't take effect until 2029, so there are several years where you can max out if not already maxed out).

The other thing to bear in mind, as others have pointed out, is that 2029 is an election year and the next gov't may be promising very different things that are relevant to contractors and the scale of umbrella employment, such as IR35, among other things. Of course, there are promises and there is delivery.

[willendure]

Bye bye brollies.

I wish, but we only have brollies because rule changes around IR35 mean that our clients sometimes force them on us, so I don't think the motivations for them to exist will change.

But if one brollie provider offers tailored contracts that make pension contributions more efficient it would make them very attractive, so others would have to do the same. Provided the whole idea is legal.

It seems very unfair to apply this tax only to regular employees, not that I am complaining as an outside IR35 only contractor! It is also a tax on investment in the G7 country with the lowest rates of investment, so cannot possibly help the economy in the long run. Just a stupid socialist policy foot gun.

[ittony]

This is an anti-avoidance measure designed to prevent someone from foregoing salary for a tax advantage, except for a small list of approved purposes, such as a pension contribution (which will disappear in 2029, above a threshold amount)...

What about forgoing dividends for a tax advantage I wonder...?

[jamesbrown]

What about forgoing dividends for a tax advantage I wonder...?

Er, how would that work? I suppose you have the tax advantage of not having dividend tax, but eventually you will have the tax disadvantage of having dividend tax or capital gains tax, which is higher (currently, and even more so in April 2026). In any case, SalSac isn't relevant to a company director who will receive employer contributions, which are unaffected (except in the edge case where a company has all contract income inside IR35, but that is exceptionally rare for, among other reasons, SalSac being available through an umbrella).

[NotAllThere]

At Autumn Budget 2025, the government announced changes to voluntary National Insurance contributions for those living or working abroad.

From 6 April 2026, individuals will no longer be able to pay voluntary Class 2 National Insurance contributions for periods abroad. Only voluntary Class 3 contributions will be available for tax years 2026 to 2027 onwards.

This change does not affect any voluntary contributions that can be paid for periods abroad before 6 April 2026.

Further details and guidance will be published at a later date.

Darn. I'll have to pay class 3 now for a couple of years until my payments are full.

[Protagoras]

I wish, but we only have brollies because rule changes around IR35 mean that our clients sometimes force them on us, so I don't think the motivations for them to exist will change.

I see three challenges for Brollies ...

• JSL will increase supply chain nervousness
• SalSac changes will make brolly engagement unattractive for workers
• Changes to Worker's Rights

I'm really uncertain that brollies will be around long term.

It seems very unfair to apply this tax only to regular employees, not that I am complaining as an outside IR35 only contractor! It is also a tax on investment in the G7 country with the lowest rates of investment, so cannot possibly help the economy in the long run. Just a stupid socialist policy foot gun.

Yep, and it's also unfair on younger people who will miss out on the opportunity to build pensions as good as the generations above. It would have been simpler to reduce the £60k annual allowance.