Two-thirds use salary sacrifice – but most workers unaware of 2029 cap

April 30, 2026

New research from Barnett Waddingham (BW), part of Howden, highlights that many workers in the UK are still unclear on salary sacrifice – despite it being one of the most widely used workplace benefits.

While nearly two-thirds (62%) of workers say they are using salary sacrifice, a similar number (63%) don’t know it will be capped in 2029, limiting how much can be paid through salary sacrifice without National Insurance being applied.

With changes to salary sacrifice actively being debated in Parliament, this highlights a clear disconnect between how widely it is used and how well workers understand potential changes coming down the line.

The findings also show how many workers are unclear on what salary sacrifice can be used for, and how it could affect their finances. One in five (20%) believe it can only be used for pension contributions, despite it also being used for a range of other benefits, including childcare support and company car schemes.

Understanding also varies across multiple aspects of how salary sacrifice works, from how it impacts take-home pay to misconceptions about whether it can bring your income below the National Minimum Wage.

Area	Belief	Reality
Tax and National Insurance	23% don’t think it reduces tax or NI; 32% are unsure	It usually reduces the amount of tax and NI you pay
Mortgage borrowing	31% don’t think it affects borrowing; 48% don’t know	It can reduce borrowing capacity
Childcare vouchers and nursery payments	20% think these aren’t included	Childcare vouchers and nursery payments are available through salary sacrifice
Take-home pay	62% think it means taking home less pay; 23% are unsure	Take-home pay may be lower, but is exchanged for benefits like pension contributions
Company car	28% are unsure whether it can be used to purchase a company car	Salary sacrifice can be used to for company car schemes
Minimum wage	15% believe it can take cash earnings below the National Minimum Wage	It cannot reduce pay below minimum wage by law

Mark Futcher, Head of DC Pensions at Barnett Waddingham, part of Howden, comments:

“For a benefit so widely used, most people are still using salary sacrifice on autopilot without knowing what’s going on under the bonnet. For something that can make a big difference to people’s long-term savings, that gap really matters.

“Adding a cap, regardless of the amount, adds another layer of fine print to a system that already feels a bit opaque for most people. And when the rules become harder to understand, people are more likely to step back than engage – a risk we can’t really afford to take at a time when retirement adequacy is already under pressure.

“There’s a balance to strike here. Salary sacrifice works best when it’s simple for workers to understand, and easy for employers to run. If that balance tips too far towards complexity, there’s a risk a well-used and effective benefit becomes less accessible than it should be.”