Ndubuisi 'Andy' Egwim (Money Wise Doctor) explains a major budget change that caps salary sacrifice national insurance relief from April 2029. Only the first £2,000 of salary sacrifice contributions will receive NI relief; amounts above that will be subject to employee and employer NICs. The change does not affect NHS pension contributions. The video targets high-earning medics (GP partners, locums, consultants) and business owners who used salary sacrifice to manage marginal tax and the 60% tax trap, and points viewers to moneywisedoctor.com and an updated chapter in the Money Wise Doctor for more detail.
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Today I'm breaking down what has changed in this new budget. What it means for doctors, NHS staff and business owners, as well as what you should consider doing next before these changes trap you financially. And you can head over to moneywisedoctor.com to read the full blog. But of course, I'm not a financial advisor. I'm not your accountant. This video is for education and general information only. Everyone's situation is different. So if you need to get professional guidance, if you need personalized guidance. All right, let's dive in. So number one, the biggest hit is salary sacrifice cap. So let's start with a change very few people expected, but one that will affect high earning doctors, GP partners, locums and anyone that is paid to a limited company the most. So these are the changes. For years, salary sacrifice has been one of the most powerful tools to, you know, escape the 60% tax trap. You can use it to reduce your adjusted net income, you could lower your marginal tax, it could boost your private or public workplace pension efficiently by paying money to salary sacrifice. But a lot of that has changed. From April 2029, that advantage gets capped. The new rule is now that only the first £2,000 that you put into your salary sacrifice will receive national insurance relief. Anything after that, you have to pay national insurance. So you pay national insurance. Your employer has to also pay national insurance. And for many employers, they might want to reduce contributions to salary sacrifice as a result. Let me be this does not affect the normal NHS pension. So NHS pension contributions, they are not basically salary sacrifice. So they remain completely unchanged. Okay, good news there now. But this change will affect like locums using limited companies, consultants receiving private employer contributions, GP partners using non NHS pension arrangements. In fact, anyone using private workplace salary salary sacrifice schemes need to check this as well. It could be that, for instance, you're a private consultant, you're earning over 120,000 and you're sacrificing some of it into a private pension in order to reduce your tax burden now and also help you avoid that 60% tax trap. Now you have to pay NI in addition to that. So this is huge because it directly targets the strategy many high ending medics used to manage the 60% tax trap. If you relied on this, you need to adjust. And yes, chapter five of the Money Wise Doctor has been fully updated to reflect this change. Now, tax efficiency is one skill every medic needs, but no one teaches. So we keep falling into multiple tax traps.
