Lords scrutinise £2,000 NICs cap in heated committee stage

National Insurance Contributions Bill clears Lords committee stage

Members of the House of Lords have completed the committee stage of the National Insurance Contributions Bill, concluding detailed line-by-line scrutiny on 24 February 2026.

The National Insurance Contributions (Employer Pensions Contributions) Bill would give the Government powers to apply a National Insurance contributions (NICs) charge where employer pension contributions are made through salary sacrifice arrangements exceeding £2,000 per annum.

The committee stage in the Lords involves a detailed examination of each clause of a bill. Peers consider amendments to the wording and may propose new clauses, beginning at the start of the legislation and proceeding sequentially.

During the session, members debated a series of proposed amendments covering a range of issues. These included potential exemptions for basic rate taxpayers in England, Wales and Scotland, and provisions relating to carrying forward unused pension contributions from previous tax years.

Peers also considered whether the £2,000 cap should be uprated annually in line with changes in the consumer price index. Other amendments addressed the potential impact of the measure on small and medium-sized enterprises, and the calculation and publication of lifetime pension values.

The bill has already undergone second reading in the Lords, which took place on 4 February and focused on its key principles. The committee stage provides a more technical opportunity to assess the detail of the legislative text and test the Government’s proposals.

The legislation forms part of wider changes to the treatment of employer pension contributions under the NICs framework. Under current arrangements, certain employer pension contributions made via salary sacrifice may attract different tax and National Insurance treatment. The bill would enable a charge to be applied where such contributions exceed the specified threshold.

No final decisions on the proposed amendments are taken at the committee stage. Peers will have a further opportunity to examine and revise the bill during report stage, which is scheduled for 5 March.

A recording of proceedings is available on Parliament TV, and a full transcript can be found in Lords Hansard. Further background is provided in a briefing from the House of Lords Library.

The bill will continue its passage through the House of Lords before returning to the House of Commons if amendments are agreed.