The government has published a bill that will limit tax relief on salary sacrifice pension contributions to £2,000 from April 2029, viewed by some as an effort to reassure gilt markets about future borrowing needs.

The bill was published on Thursday and will have its second reading on 17 December.

The government has moved quickly to introduce the necessary legislation for the measures chancellor Rachel Reeves introduced in her Budget last month, possibly to send a signal to bond markets that these projected tax receipts will not evaporate closer to the next election. The salary sacrifice cap does not come into force for another three-and-a-half years, when the UK is set to go to the polls.

In her Budget speech, Reeves cited the growing projected cost of providing NICs relief on salary sacrifice schemes to justify her decision.

On sacrificed salary of more than £2,000, NICs will be levied at normal rates of 8% up to the basic rate threshold and at 2% above that. Pension contributions remain exempt from income tax at marginal rates.

A bill that will freeze income tax and national insurance thresholds beyond 2028, until 2030-31, has also been published.

The Treasury said the tax-raising legislation “underpins the government’s plan to fix a broken welfare system and renew public services”.

Exchequer secretary to the Treasury, Dan Tomlinson, said: “The choices in this Budget are fair, necessary reforms that cut the cost of living, cut waiting lists and cut borrowing, avoiding both a return to austerity and a reckless borrowing spree.”

The pensions industry has largely condemned the government’s pension contributions raid, warning that trust will suffer and savings levels will fall.