National Insurance Contributions (Employer Pensions Contributions) Bill: Second Reading
312Ayes
165Noes
Carried · majority 147 · Government won172 did not vote
649 Members · Aye 312 · No 165 · DNV 172 · grey dots in centre are abstentions
Analysis
Commons
Commons
Parliament voted on 17 December 2025 to give a Second Reading to the National Insurance Contributions (Employer Pensions Contributions) Bill, passing it by 312 votes to 165. The bill would apply Class 1 National Insurance contributions to salary sacrifice pension arrangements where the amount sacrificed exceeds £2,000 a year, with the change taking effect from April 2029. Salary sacrifice below that threshold would remain free of NICs, and the income tax treatment of pension contributions would be unchanged. The measure matters because it would end a long-standing exemption that, according to the government, was becoming increasingly costly. Ministers told the House that the cost of pension salary sacrifice relief was on course to nearly treble between 2017 and the end of the decade, reaching around £8 billion a year. Critics argued the change adds to a rising burden on employers at a time when labour costs are already climbing, with the Federation of Small Businesses in Northern Ireland highlighting to the House that utility prices, labour costs and taxes had all risen sharply in recent years. The vote divided almost entirely along party lines. All 271 Labour MPs and 31 Labour and Co-operative MPs who voted backed the bill, as did four Green MPs and three independents. Every Conservative, Liberal Democrat, Reform UK, SNP, Plaid Cymru and Ulster Unionist MP who voted went into the No lobby, a total of 165 votes against. There were no Labour rebels. The government had previously pointed to Conservative statements in the 2015 Budget and a 2016 announcement by then-Chancellor Hammond acknowledging that salary sacrifice was unfair and costly, suggesting the reform had cross-party intellectual roots even if it lacked cross-party support in the division lobby.
Voting Aye meant
Support extending NICs to pension salary sacrifice above £2,000 per year, accepting the government's case that the relief is costly, regressive and increasingly indefensible.
Voting No meant
Oppose the new NIC charge on pension salary sacrifice, arguing it burdens employers and workers at a time of already rising labour costs.
Each row is one party. The stacked bar gives the within-party split of Aye / No / Absent; the columns on the right give the raw counts. The whip column shows the published party position — “Free vote” means the whip was formally removed for this division.
Party
Whip
Aye / No / Abs
Aye
No
Abs
Labour Party
Whipped Aye
271
0
90
Conservative and Unionist Party
Whipped No
0
91
25
Liberal Democrats
Whipped No
0
59
12
Labour and Co-operative Party
Whipped Aye
31
0
11
Independent
—
3
3
7
Scottish National Party
Whipped No
0
4
5
Reform UK
Whipped No
0
6
2
Sinn Féin
—
0
0
7
Democratic Unionist Party
—
0
1
4
Green Party of England and Wales
Whipped Aye
4
0
0
Plaid Cymru
Whipped No
0
3
1
Social Democratic and Labour Party
—
0
0
2
Your Party
—
0
0
2
Alliance Party of Northern Ireland
—
0
0
1
Restore Britain
—
0
0
1
Speaker
—
0
0
1
Traditional Unionist Voice
—
0
0
1
Ulster Unionist Party
—
0
1
0
Source · Hansard · UK Parliament Votes API · whip status from announced positions; “free vote” indicates the whip was formally removed
The cap is necessary, pragmatic, and fair; salary sacrifice costs are exploding (to £8bn/year), benefits disproportionately flow to high earners, and the policy protects 95% of those earning under £30k while giving businesses nearly 4 years to adjust.Labour · Voted aye · Read full speech (3,039 words) →
This is a £4.8bn tax raid on savers that contradicts the government's own financial inclusion strategy; it will discourage pension saving when adequacy is a crisis, hits middle-income earners disproportionately, and creates administrative chaos for 290,000 employers.Conservative · Voted no · Read full speech (3,188 words) →
The policy creates a double whammy: short-term revenue for the government but long-term pain for savers; 40% of people are already unlikely to invest in pensions, and the measure adds to business burdens already from energy costs and previous NI hikes.Liberal Democrat · Voted no · Read full speech (447 words) →
Labour has broken its manifesto pledge not to raise NI; the CBI and ABI warn this is a tax on doing the right thing that will damage growth and pension saving; behavioural changes may mean far less revenue than the OBR forecasts.SNP · Voted no · Read full speech (808 words) →
The Bill taxes aspiration and penalizes prudence; it discourages savings at exactly the wrong time and will disproportionately burden women returning from maternity leave who seek to catch up contributions.Conservative · Voted no · Read full speech (642 words) →
Another anti-aspiration measure that breaks Labour's tax pledge; the OBR figures appear inflated by timing to maximize 2029-30 revenue; the policy worsens private-sector pension security compared to public-sector gold-plated schemes.Conservative · Voted no · Read full speech (967 words) →
The cap is fair targeting of a £75bn-per-year relief; low-wage workers cannot access salary sacrifice anyway, so they are unaffected; the long implementation gives businesses time to plan and the OBR costing is dynamic and robust.Labour · Voted aye · Read full speech (1,279 words) →
Raises serious concerns about cost-of-living pressures on small businesses already facing utility increases of 52.7%, labour costs up 51.5%, and taxes up 47.2%.DUP · Voted no · Read full speech (89 words) →
Sources
Division dataUK Parliament Votes API
DebateHansard · Commons
Stance analysisAI analysis · Claude 4.x
LicenceOpen Parliament Licence v3.0