Salary sacrifice calculator
What sacrificing part of your salary into a pension costs you in take-home pay — as an amount and as a share of the money — set beside the same contribution paid into a personal pension out of taxed income, with the employer’s National Insurance saving shown separately because it is not automatically yours.
Calculator
Your contractual pay before any deduction — the figure on your contract or job advert, not the amount that reaches your bank account, and before any sacrifice you already make. If you are already sacrificing, add it back: this page starts from unreduced pay.
The pay you give up. Under a salary sacrifice arrangement this is not a deduction from your wages — your contractual pay is reduced by it, which is why it saves National Insurance as well as income tax.
Income tax rates differ in Scotland, so the same sacrifice costs a different amount there. National Insurance is set at Westminster and is identical everywhere in the UK.
Rates and thresholds change every April, and a sacrifice arranged in one year is priced by that year’s figures.
Employee National Insurance runs at £12,570 of pay and the rate falls above £50,270, so a sacrifice above that limit saves much less National Insurance than one below it. The employer pays their own, above £5,000, and that is the saving the box above is about.
What the sacrifice costs you, pound by pound
Sacrificing £10,000.00 costs you 38.00% of it
Your take-home pay falls by £3,800.00 a year — from £72,357.40 to £68,557.40 — while £10,000.00 goes into your pension. That is 38.00% of every pound that actually reaches the pension.
The rate above is not a tax rate and you will not find it published anywhere. It is what one pay calculation costs against another, and it depends on which thresholds your pay crosses on the way down — which is why the same sacrifice can cost more on a lower salary. The table further down shows that column.
Your pay, before and after
Two ordinary pay calculations at two different salaries — England or Northern Ireland income tax and UK-wide employee National Insurance, exactly as the take-home pages compute them. A sacrifice is not a deduction from your wages; it is a reduction in the wage itself, which is why the National Insurance line moves at all.
| Figure | Before | After | Difference |
|---|---|---|---|
| Gross pay | £110,000.00 | £100,000.00 | −£10,000.00 |
| Income tax (England or Northern Ireland) | £33,432.00 | £27,432.00 | −£6,000.00 |
| Employee National Insurance | £4,210.60 | £4,010.60 | −£200.00 |
| Personal allowance used | £7,570.00 | £12,570.00 | +£5,000.00 |
| Take-home pay | £72,357.40 | £68,557.40 | −£3,800.00 |
These are annual figures. Real PAYE is operated cumulatively across the year and real National Insurance is worked out on each pay period separately, so the month a sacrifice starts will not match a twelfth of the change above. What this answers is what a full year on the reduced salary looks like.
Where the saving comes from
| Saving | Amount | Of the sacrifice |
|---|---|---|
| Income tax you no longer pay | £6,000.00 | 60.00% |
| Employee National Insurance you no longer pay | £200.00 | 2.00% |
| Take-home pay you give up | £3,800.00 | 38.00% |
The two savings add to £6,200.00, and the sacrifice less that saving is what your take-home pay actually falls by. The employer’s National Insurance saving of £1,500.00 is not in this table — it is theirs, not yours, and it reaches your pension only if they choose to put it there. It has its own panel below.
The same money, paid into a personal pension instead
Sacrificing leaves £200.00 more take-home a year than paying the same £10,000.00 into a personal pension out of taxed income, with the same £10,000.00 in the pension either way.
| Figure | Salary sacrifice | Personal pension, relief at source |
|---|---|---|
| Gross pay for income tax and National Insurance | £100,000.00 | £110,000.00 |
| Out of your own pocket | £10,000.00 | £8,000.00 |
| Added by the provider, reclaimed from HMRC | £0.00 | £2,000.00 |
| Into the pension | £10,000.00 | £10,000.00 |
| Income tax relief, however it arrives | £6,000.00 | £6,000.00 |
| — of which you have to claim back yourself | £0.00 | £4,000.00 |
| Employee National Insurance saved | £200.00 | £0.00 |
| Employer National Insurance saved | £1,500.00 | £0.00 |
| Take-home pay left, same pension either way | £68,557.40 | £68,357.40 |
The difference is the employee National Insurance, and nothing else. Both routes deliver £6,000.00 of income tax relief — a sacrifice by taxing a smaller salary, relief at source by adding £2,000.00 at source and moving your basic-rate band up by the contribution so that £4,000.00 more comes back through your tax return or your tax code. The two columns above therefore differ by exactly the £200.00 of National Insurance a sacrifice saves and a personal pension does not, because only a sacrifice reduces the pay National Insurance is charged on.
The personal pension column assumes the relief above the basic rate is actually claimed. £2,000.00 arrives automatically; the £4,000.00 above it does not — it comes back through Self Assessment or a tax code adjustment, and HMRC has said repeatedly that a great deal of it goes unclaimed. A reader who does not claim it is worse off on that side than the table shows. Nothing on the sacrifice side needs claiming, because the money was never taxed in the first place. The employer’s £1,500.00 of National Insurance saving is left out of the comparison — it has no counterpart on the personal pension side, and it reaches a pension only if the employer chooses to add it. Its own panel is below.
Your sacrifice is unwinding the personal allowance taper
Above £100,000 the personal allowance is withdrawn by £1 for every £2 of income, so a pound of pay in that stretch also exposes another 50p to tax. On your pay the next pound costs 62.00% in income tax and National Insurance together — higher than any rate printed on this page, because it is a band rate times one and a half plus National Insurance.
Sacrificing runs that backwards. Giving up £10,000.00 of pay has handed back £5,000.00 of personal allowance, which is why the cost of this sacrifice — 38.00% — is lower than it would be on an ordinary higher-rate salary. This is the cheapest stretch of pay in the UK system to sacrifice out of, and it is the one place where sacrificing more costs less per pound than sacrificing less.
Whether that is worth doing is a question about your own circumstances, your pension allowances and what you need the money for, and this page does not answer it. It answers what it costs.
Your employer saves too — and may or may not pass it on
| Employer National Insurance before | £15,750.00 |
|---|---|
| Employer National Insurance after | £14,250.00 |
| Their saving | £1,500.00 |
| Added to your pension, at the 0.00% you set | £0.00 |
| Total into your pension | £10,000.00 |
Employer National Insurance is charged at 15.00% above £5,000 of pay, on top of the salary rather than out of it. Nothing obliges an employer to add their saving to your pension. Some schemes pass on all of it, some a share, most none — it is a term of your scheme, not a rule of the tax system, and this page uses whatever you told it above rather than assuming. If your scheme booklet does not say, payroll will know.
The same sacrifice, at other salaries
£10,000.00 sacrificed, priced at five salaries in England or Northern Ireland for 2026/27. Read the last two columns downwards: neither falls steadily, and neither rises steadily either.
| Salary | Take-home given up | Employer’s saving | Cost of the sacrifice | Kept by sacrificing rather than paying in yourself |
|---|---|---|---|---|
| £30,000 | £7,200.00 | £1,500.00 | 72.00% | £800.00 |
| £50,000 | £7,200.00 | £1,500.00 | 72.00% | £800.00 |
| £60,000 | £5,837.80 | £1,500.00 | 58.38% | £216.20 |
| £110,000in the taper | £3,800.00 | £1,500.00 | 38.00% | £200.00 |
| £150,000 | £5,300.00 | £1,500.00 | 53.00% | £200.00 |
Where a salary is below the sacrifice the row shows the whole salary given up, because pay cannot go below zero. The rows marked in the taper are the ones between £100,000 and the point the personal allowance has gone entirely. The last column falls sharply once pay is above the National Insurance upper earnings limit of £50,270, where the employee rate drops from 8.00% to 2.00% — and that column is negative wherever relief at source gives more than a sacrifice does, which happens when the pay given up would not have been taxed.
Six things this figure does not know
The comparison above assumes the personal pension relief is actually claimed
Stated first because it is the assumption most likely to be wrong. On the relief-at-source side, £2,000.00 of the relief arrives on its own — the provider reclaims it — and the £4,000.00 above it does not. That part is claimed by the member, through Self Assessment or a tax code adjustment, and HMRC has said repeatedly that a great deal of higher-rate relief goes unclaimed, because nothing prompts it. The comparison prices the claim as made. A reader who does not make it keeps less than the personal pension column shows, and nothing on this page can tell which of those two readers you are. gov.uk sets out how relief is given, and the pension tax relief calculator works the claim out on its own.
It does not know your hours, so it cannot check the National Minimum Wage
A salary sacrifice arrangement must not reduce cash earnings below the National Minimum Wage. That is gov.uk’s wording, and employers are required to cap sacrifice to stay above it. The cap depends on your hours and your age, neither of which this page asks for, so it cannot apply the test — a figure here that looks affordable may simply not be allowed. Check the current rates and gov.uk’s guidance for employers.
It does not price what a lower salary costs you elsewhere
Your salary after the sacrifice is £100,000.00, and that is now the figure a great many things are worked out from. gov.uk states plainly that salary sacrifice “can affect the amount of statutory pay an employee receives” and “can cause some employees to lose their entitlement altogether” — statutory maternity and paternity pay are calculated from average weekly earnings, so a sacrifice in the months before a birth reduces them — and it may also reduce entitlement to Maternity Allowance and to contribution-based benefits including the State Pension. Beyond the tax system, the reduced figure is usually the one a mortgage lender assesses and the one death-in-service cover is a multiple of. Neither of those last two is a tax rule and neither is modelled here; ask your lender and read your scheme booklet.
It does not check your pension annual allowance
There is a limit on how much can go into pensions each year with tax relief, it counts employer contributions and salary sacrifice as well as your own, and it is reduced for high earners by a taper of its own — the one place a very large sacrifice can be actively expensive. This calculator applies no such limit and would happily price a sacrifice well past it. Check the annual allowance on gov.uk, including carry-forward of unused allowance from earlier years — the pension contribution calculator applies it to your own figures.
It prices the tax years it offers, and the rules are changing in 2029
From April 2029 only the first £2,000 a year of employee pension contributions made through salary sacrifice will be exempt from National Insurance; contributions above that will be subject to employer and employee National Insurance, while income tax relief is unaffected. That is outside every tax year this page offers, so nothing above reflects it — but a sacrifice being set up now is a long-lived arrangement. gov.uk sets out the change.
It is one salary and one sacrifice, and nothing else on the payslip
No student loan or postgraduate loan repayment — those are worked out on the reduced pay too, so a sacrifice reduces them, and none of it is modelled here. No existing auto-enrolment contribution, no tax code adjustment, no benefit in kind, no second job, no self-employed profit, no savings interest or dividends. A sacrifice into something other than a pension — an electric car, a cycle scheme — has the same effect on pay as the one above but usually carries a benefit-in-kind charge of its own, which is not modelled.
Worked example: the same salary sacrifice pension contribution, two salaries
The same £10,000 sacrifice costs 58.38% of itself to one employee and 38.00% to the other — and it is the better-paid one who gives up less. Both are in England, both sacrifice into a pension, and neither employer passes on their own National Insurance saving. Nothing about the arrangement differs. Only where their pay sits on the schedule does.
Priya earns £60,000. She sacrifices £10,000, which takes her pay to £50,000. Her income tax falls by £3,946.00 and her National Insurance by £216.20, so her take-home pay drops by £5,837.80 — 58.38% of the money she put in the pension. Her pay is above the National Insurance upper earnings limit of £50,270, so the National Insurance she saves is at the lower 2.00% rate rather than the main one.
Deepak earns £110,000 — inside the stretch where the personal allowance is being withdrawn. His £10,000 sacrifice takes his pay to £100,000 and hands back £5,000.00 of personal allowance along the way. His income tax falls by £6,000.00 — over half as much again as Priya’s — and his take-home pay drops by only £3,800.00, which is 38.00% of what went into the pension.
| Figure | Priya, £60,000 | Deepak, £110,000 |
|---|---|---|
| Income tax saved | £3,946.00 | £6,000.00 |
| Employee National Insurance saved | £216.20 | £200.00 |
| Personal allowance restored | £0.00 | £5,000.00 |
| Employer National Insurance saved | £1,500.00 | £1,500.00 |
| Take-home pay given up | £5,837.80 | £3,800.00 |
| Cost of the sacrifice | 58.38% | 38.00% |
The employer’s saving is £1,500.00 in both cases, because employer National Insurance is a single rate above a single threshold and both salaries are well above it. Whether that money reaches either pension is a matter for each employer, and the box on the calculator above is where to say which one you have.
Paying the same £10,000 into a personal pension out of taxed income would leave Priya £216.20 a year worse off than sacrificing and Deepak £200.00 — and those two figures are the employee National Insurance each of them saves, because income tax relief comes to the same amount either way. Deepak’s is the smaller of the two despite the larger salary, for the same reason his National Insurance saving is small: his pay is well above the upper earnings limit, where the employee rate falls to 2.00%. The calculator above sets the two routes side by side on whatever figures you enter.
Neither figure includes a student loan repayment, an existing pension contribution or anything a tax code might be carrying.
Methodology and sources
The calculation, in order
- Work out income tax and employee National Insurance on your salary as it stands, and the employer National Insurance the employer pays on top of it.
- Reduce the salary by the amount sacrificed. This is the whole mechanism: a salary sacrifice is an agreement to reduce your entitlement to cash pay in return for a non-cash benefit, so the arithmetic is the same calculation at a lower gross figure. It is not a deduction taken from your pay after it has been worked out.
- Work out all three figures again at the reduced salary.
- The fall in take-home pay is what the sacrifice costs you. Divide it by the amount sacrificed to get the rate this page leads with.
- Add whatever share of the employer’s National Insurance saving you told the page they pass on, to get the total reaching the pension.
Income tax is charged on pay after the personal allowance; National Insurance is charged on gross pay from its own threshold. A sacrifice reduces both bases at once, which is why it saves National Insurance where a contribution out of taxed income does not. Employee National Insurance runs from £12,570 at 8.00% and falls to 2.00% above £50,270, so a sacrifice out of pay above that limit saves far less National Insurance than one out of pay below it. Employer National Insurance is 15.00% above £5,000, with no upper limit at all.
Rates and thresholds
| Figure | 2025/26 | 2026/27 |
|---|---|---|
| Personal allowance | £12,570 | £12,570 |
| Personal allowance taper starts at | £100,000 | £100,000 |
| Allowance lost per £1 of income above that | £1 for every £2 | £1 for every £2 |
| Employee National Insurance — threshold, main rate, upper limit, upper rate | £12,570, 8.00%, £50,270, 2.00% | £12,570, 8.00%, £50,270, 2.00% |
| Employer National Insurance — threshold and rate | £5,000, 15.00% | £5,000, 15.00% |
| Income tax bands — England, Wales and Northern Ireland | Basic rate 20.00% from £0; Higher rate 40.00% from £37,700; Additional rate 45.00% from £125,140 | Basic rate 20.00% from £0; Higher rate 40.00% from £37,700; Additional rate 45.00% from £125,140 |
| Income tax bands — Scotland | Starter rate 19.00% from £0; Basic rate 20.00% from £2,827; Intermediate rate 21.00% from £14,921; Higher rate 42.00% from £31,092; Advanced rate 45.00% from £62,430; Top rate 48.00% from £125,140 | Starter rate 19.00% from £0; Basic rate 20.00% from £3,967; Intermediate rate 21.00% from £16,956; Higher rate 42.00% from £31,092; Advanced rate 45.00% from £62,430; Top rate 48.00% from £125,140 |
What this page does not model
- The April 2029 National Insurance change, which is the one that matters to the comparison. From that date only the first £2,000 a year of pension salary sacrifice keeps its National Insurance exemption. It is outside every tax year offered here, and it cannot simply be added: from then on the pay National Insurance is charged on and the pay income tax is charged on are two different figures for the same employee, and the National Insurance engines each take a single gross pay.
- Whether the relief-at-source relief is claimed. The comparison prices the higher-rate relief as claimed in full. It does not arrive on its own, and a reader who never claims it keeps less than the personal pension column shows.
- The National Minimum Wage floor. Sacrifice must not take cash earnings below it, and the cap depends on hours and age which this page does not ask for.
- The pension annual allowance and its taper for high earners, both of which count employer contributions and sacrifice.
- Everything else on a payslip — student loan repayments, existing pension contributions, tax codes, benefits in kind, second jobs, savings interest and dividends.
Where the figures come from
- gov.uk — Salary sacrifice for employers
- gov.uk — Pension tax relief
- gov.uk — Pension annual allowance
- gov.uk — National Minimum Wage and National Living Wage rates
- gov.uk — Changes to salary sacrifice for pensions from April 2029
- gov.uk — Rates and thresholds for employers
- gov.uk — Income tax rates and allowances: current and past
The rates and allowances in the table above were verified against gov.uk on 12 August 2026. That check covers the published figures this page computes with. It does not verify any result the page produces, and it has not yet been signed off by a person — the verification recorded in the source repository is an automated one. Check anything that matters against gov.uk or with an accountant.
Every calculation runs in your browser. There is no application server and no database, so nothing you type is transmitted or stored. A share link is the exception: it carries your figures in the URL. More on what that means. Information, not advice.
Frequently asked questions
- How does a salary sacrifice pension work?
You agree with your employer to give up part of your contractual pay, and they pay that amount into your pension instead. gov.uk describes it as an agreement to reduce an employee’s entitlement to cash pay in return for a non-cash benefit. Because your gross pay is genuinely lower, you pay less income tax and less National Insurance on it, and your employer pays less employer National Insurance too. That is the whole mechanism: there is no relief to claim and nothing to put on a tax return, because the money was never part of your pay in the first place.
- How much does salary sacrifice actually cost me?
Less than the amount you sacrifice, and how much less depends entirely on which thresholds your pay crosses on the way down. On £60,000 in England, sacrificing £10,000 reduces take-home pay by £5,837.80 — 58.38% of the money. On £110,000 the same sacrifice reduces take-home pay by only £3,800.00, or 38.00%, because pay in that range is also restoring personal allowance that had been withdrawn. The calculator above works this out for your own figures.
- Why is salary sacrifice cheaper between £100,000 and £125,140?
Because the personal allowance is withdrawn across that stretch, at £1 of allowance for every £2 of income. A pound of pay there therefore exposes £1.50 to tax, and the rate on the next pound is one and a half times the band rate — 62.00% once National Insurance is added, on £110,000 in England. Sacrificing runs that backwards: pay given up in that range hands the allowance back. It is the one place in the UK system where giving up more pay costs less per pound than giving up less, and it is why the two employees in the worked example above see such different figures for an identical arrangement.
- How does salary sacrifice compare with paying into a pension myself?
On the same money into the pension, the difference is National Insurance and usually nothing else. Income tax relief arrives in full either way: a sacrifice reduces the salary that is taxed, while a personal pension gets relief at source — the provider adds basic-rate relief and the rest comes back by extending your basic-rate band, usually through Self Assessment. Only a sacrifice reduces the pay National Insurance is charged on, so on £60,000 in England, sacrificing £10,000 leaves £216.20 a year more take-home than paying the same amount in yourself, and on £110,000 it leaves £200.00 — smaller, because pay above the £50,270 upper earnings limit saves National Insurance at only 2.00%. Below the personal allowance the comparison reverses, because relief at source is added even to a contribution out of income that bore no income tax. Two things the comparison assumes: that the relief above the basic rate is actually claimed, and that the tax year is one of those offered here — from April 2029 only the first £2,000 a year of pension salary sacrifice keeps its National Insurance exemption.
- Does my employer have to add their National Insurance saving to my pension?
No. A sacrifice reduces the employer’s own National Insurance bill, which is charged at 15.00% on pay above £5,000 with no upper limit. Whether any of that saving goes into your pension is a term of your employer’s scheme rather than a rule of the tax system: some pass on all of it, some a share, many none at all. It materially changes what you end up with, so the calculator asks rather than assuming, and it starts at nothing. Your scheme booklet should say; if it does not, payroll will know.
- Can I sacrifice my whole salary?
No. gov.uk is explicit that a salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage rates, and that employers must put procedures in place to cap the sacrifice so those rates are maintained. The cap depends on your hours and your age, neither of which this calculator asks for, so it cannot apply the test for you — a figure here that looks affordable may simply not be permitted. There is also a limit on how much can go into a pension each year with tax relief, which counts employer contributions and sacrifice alike and is reduced for high earners.
- What does salary sacrifice cost me apart from tax?
Your salary is genuinely lower, and a lot of things are worked out from your salary. gov.uk states that salary sacrifice can affect the amount of statutory pay an employee receives and can cause some employees to lose their entitlement altogether — statutory maternity and paternity pay are calculated from average weekly earnings, so sacrificing in the months before a birth reduces them — and that it may reduce entitlement to Maternity Allowance and to contribution-based benefits including the State Pension. Outside the tax system, the reduced salary is usually the figure a mortgage lender assesses and the figure death-in-service cover is a multiple of. None of that is modelled here.
- Does salary sacrifice reduce my student loan repayments?
Yes, because student loan repayments are worked out on your pay and your pay is lower. That is not modelled here: this calculator has no student loan input of any kind — no plan types, no thresholds, no rates — so the fall in take-home pay shown above is slightly larger than the fall a borrower would actually see. It is the one omission on this page that pushes the answer against the sacrifice rather than for it.
- Is salary sacrifice changing?
Yes, from April 2029. From that date only the first £2,000 a year of employee pension contributions made through salary sacrifice will be exempt from National Insurance; contributions above that will be subject to employer and employee National Insurance, in the same way as other employee workplace pension contributions. Income tax relief is unaffected. Every tax year this calculator offers is before that change, so nothing it shows reflects it — but a sacrifice arrangement set up now is a long-lived one, and the gov.uk publication on the change is linked in the methodology below.
- What does the calculator show on the figures it opens with?
On £110,000 a year in England for 2026/27, sacrificing £10,000 takes gross pay to £100,000. Income tax falls by £6,000.00 and employee National Insurance by £200.00, so take-home pay falls by £3,800.00 — 38.00% of the money sacrificed. The employer saves £1,500.00 of their own National Insurance, which the page counts as reaching the pension only if you say it does. Employee National Insurance saves little here because the pay is above the £50,270 upper earnings limit, where the rate is 2.00%.