Fuel duty fears and salary sacrifice warning ahead of Budget

A deepening Government blackhole is potentially putting fleets in the firing line, with tax rises predicted in the Budget.

The latest Budget speculation suggests that the Chancellor, Rachel Reeves may hike employer national insurance contributions (NICs).

Labour’s election manifesto suggested it would not increase national insurance if elected, but when asked about a possible rise, the Prime Minister refused to rule it out, instead saying it had pledged not to raise taxes on working people.

Employers currently pay national insurance of 13.8% on all earnings above £175 per week. They do not pay NI on pension contributions, but there are concerns that this could change and the impact this could have on wider salary sacrifice arrangements, such as cars.

If Government opted to impose a contribution of 2%, for example, it could add thousands of pounds to employer costs.

Raj Mody, partner and pensions specialist at PwC, warned there could be implications for employee salary sacrifice schemes. “If the NI regime was changed, employers may well want to reconsider whether these arrangements are still sensible,” he told the Financial Times.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “In the Labour party manifesto, it stated it would not raise national insurance for working people.