The 2025 Autumn Budget: what it could mean for salary sacrifice schemes in the UK

The 2025 Autumn Budget is just around the corner, and whatever is announced by Chancellor Rachel Reeves could reshape the way UK employers support their workforce. 

With an estimated £20bn fiscal gap to close, nothing is off the table – and early signals suggest salary sacrifice schemes may be part of the government’s review.

That means next week’s decisions could have a real impact on pensions, nursery schemes, EVs, Cycle to Work schemes and more.

In this article, we’ll unpack the rumours, explore what these might mean for UK employers and employees, and share our take on how this could impact CycleSaver.

So, what type of changes can we expect for salary sacrifice schemes? 

Salary sacrifice is popular with both employers and employees because it delivers income and National Insurance tax savings for employees and National Insurance tax savings for employers.

Employees swap part of their salary for a benefit, and the amount sacrificed is exempt from National Insurance Contributions (NICs). That’s why so many employers use salary sacrifice arrangements for pensions, bikes, EVs and more for their workforce.

But reports ahead of the 2025 Autumn Budget indicate that this may be about to change. 

The most widely discussed proposal is a cap of around £2,000 per year on pension salary sacrifice contributions, above which full employer and employee NI would apply. 

But caps like this may not be limited to just pensions. In fact, several commentators suggest it could extend to other salary sacrifice benefits too.

If applied, this would mean:

• Employees save less money when they use salary sacrifice benefits

• Employers lose part of the NI saving that makes these schemes financially attractive to businesses

• Higher earners and those maximising salary sacrifice schemes would feel the biggest impact

As of right now, none of these rumours are confirmed but the direction of travel is clear – the government is looking at salary sacrifice relief as a lever for revenue.

How does this impact employee benefits across the UK? 

It isn’t just pensions and bikes that could be affected. Salary sacrifice underpins several high value benefits across the UK. And any cap or adjustment to NI rules would have knock-on effects across employers and employees alike.

For employers:

• NI savings could shrink, making salary sacrifice benefits less beneficial to offer

• Some employee benefits may need redesigning or re-modelling to remain viable

• Payroll teams may face new administrative demands as changes come into force

• Employers may reassess which benefits they choose to offer their employees

For employees:

• The financial incentive to join salary sacrifice schemes could reduce if NI savings are capped or limited, especially for lower income earners/ those on the basic tax band

• Some benefits that feel affordable because of salary sacrifice – like commuting, childcare or EV schemes – may deliver smaller savings than before

• Higher-value purchases or subscriptions may become less attractive if the tax advantages shrink

• Employees may need clearer guidance from their employers to understand how their take-home pay is affected and whether their existing arrangements will continue unchanged

What does this mean for the Cycle to Work scheme?

One area generating significant discussion is the Cycle to Work scheme. 

For years it has offered strong tax savings on bikes and accessories, including higher priced e-bikes. 

But recent speculation suggests the government is looking closely at capping the scheme, which they believe is being abused. 

One government official told the Financial Times, “Cycle to Work should be about helping ordinary commuters switch to greener travel, not giving tax breaks to high earners buying £4,000 e-bikes for weekend rides in the Surrey Hills.”

What’s being discussed:

• A potential cap on high-value bikes and equipment

• A tightening of eligibility rules for non-commuting use

• Reduced relief for expensive e-bikes and cargo bikes

• A sharper focus on affordability and everyday commuting

If confirmed, these changes could reshape the Cycle to Work market all together. 

Traditional Cycle to Work providers that focus heavily on more expensive retail bike purchases may see a downwards shift, while innovative solutions like CycleSaver could offer the perfect solution to concerns raised by the government.

Why CycleSaver could be the solution to salary sacrifice caps

CycleSaver exists to make cycling to work accessible, affordable and more convenient than ever. Instead of purchasing a bike, employees subscribe to bike-share providers like Lime, Forest, Santander Cycles and more – saving up to 47% via salary sacrifice.

Because our model is subscription-based rather than purchase-based, we sit in a very different place to the traditional Cycle to Work market.

Why CycleSaver may be less affected:

• Our products are low-cost compared with high-end bike purchases

• The model doesn’t rely on large one-off transactions that caps would target

• It directly supports day-to-day commuting, which aligns tightly with the scheme’s original policy goals

• It requires no ownership and no long-term commitment, so it suits more employees

If the government introduces caps or tighter limits on premium bike purchases, the value of bike-share salary sacrifice may become even more compelling.

But more importantly, CycleSaver aligns with what policymakers say they want: affordable, accessible commuting options that support people getting to work without adding cost or complexity. 

Our model is built for everyday riders, not luxury purchases – which puts CycleSaver on the right side of the conversation as the government looks to refocus the Cycle to Work scheme.

What happens next?

We’ll continue tracking the latest developments and will update our CycleSaver community as soon as the Budget detail is confirmed. 

But, whatever Chancellor Reeves announces, our focus remains the same – helping employers offer cycling benefits that are simple, sustainable and accessible to as many employees as possible.