Salary Sacrifice Calculator UK
Pension, Tax & NI Saved 2026/27
See what a pension salary sacrifice really costs you in take-home pay, what it adds to your pension, and how it compares with a personal contribution in 2026/27.
Read the full answer — method, rates and figures
Quick answer: Pension salary sacrifice swaps part of your salary for an employer pension contribution, so you pay no income tax, no National Insurance and no student loan on the amount sacrificed. On a £45,000 salary, sacrificing £3,000 a year puts £3,000 in your pension but lowers take-home pay by only £2,160: each £1 in the pension costs 72p.
A higher-rate taxpayer on £60,000 pays 58p per £1, and between £100,000 and £125,140, where the personal allowance is withdrawn, it can cost 38p. Your employer also saves 15% National Insurance and may add it to your pension.
From April 2029 only the first £2,000 a year escapes National Insurance (the income tax saving is unchanged). 2026/27 rates, England, Wales and Northern Ireland; checked 6 October 2026.
How much does salary sacrifice save?
On £45,000, sacrificing £3,000 a year saves £600 income tax and £240 National Insurance, so your take-home pay falls by £2,160 while £3,000 goes into your pension: 72p for each £1.
Into your pension
£3,000
Take-home cost
£2,160
Cost of each £1
72p
Better than relief at source
£240
Take-home pay £35,920 → £33,760 a year (£180 a month less). Saved: £600 income tax, £240 National Insurance.
Your employer saves £450 National Insurance; ask whether it passes any of that on. From April 2029, with the £2,000 cap, your National Insurance saving would be £160 at today's rates.
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Into your pension a year
£3,000
Take-home cost
£2,160
Cost of each £1
72p
Tax + NI saved
£840
Last reviewed 6 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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Try Richify freeHow it works
Take-home pay is worked out twice with the same 2026/27 engine as our take-home pay calculator: on your full salary and on the salary after the sacrifice. The difference is the real cost. Income tax uses England, Wales and Northern Ireland bands with the personal allowance taper between £100,000 and £125,140; employee National Insurance is 8% then 2%; employer National Insurance is 15% above £5,000.
"Better than relief at source" is the National Insurance and student loan you save, plus any employer pass-on, compared with paying the same gross amount into a personal pension (which gets the same income tax relief). Scottish income tax bands, bonus sacrifice and the annual allowance are not modelled.
What a 5% salary sacrifice costs at different salaries
| Salary | 5% sacrificed | Take-home cost | Per £1 |
|---|---|---|---|
| £30,000 | £1,500 | £1,080 | 72p |
| £45,000 | £2,250 | £1,620 | 72p |
| £60,000 | £3,000 | £1,740 | 58p |
| £80,000 | £4,000 | £2,320 | 58p |
| £110,000 | £5,500 | £2,090 | 38p |
2026/27, no student loan, employer keeps its National Insurance saving. "Per £1" = take-home pay given up for each £1 that reaches the pension.
Salary sacrifice above £100,000 and for Child Benefit
Salary sacrifice lowers your adjusted net income, which is what the personal allowance taper, the High Income Child Benefit Charge and tax-free childcare all test. Between £100,000 and £125,140 a sacrifice costs about 38p per £1 of pension. Model the taper with the £100k tax trap calculator and the Child Benefit charge with the High Income Child Benefit Charge calculator.
The £2,000 National Insurance cap from April 2029
From 6 April 2029 only the first £2,000 a year of pension salary sacrifice will be free of employee and employer National Insurance. The income tax saving stays. At today's rates your own National Insurance saving would be £160 instead of £240. See the full before-and-after with the salary sacrifice cap calculator, and what your pot could grow to with the UK pension calculator.
Last updated: 6 October 2026, 2026/27 tax year.
Primary sources: HMRC rates and thresholds for employers 2026 to 2027; Finance Act 2026 (allowances frozen to 2030-31); National Insurance Contributions (Employer Pensions Contributions) Act 2026 s.1; GOV.UK Repaying your student loan.
How to use this calculator
- Enter your annual salary before any sacrifice.
- Enter how much a year you want to sacrifice into your pension.
- Say whether your employer passes on any of its National Insurance saving.
- Add your student loan plan if you have one.
- Read what goes into the pension, what it costs in take-home pay, and the cost of each £1.
❓ Frequently Asked Questions
How does pension salary sacrifice work?
You agree to a lower salary and your employer pays the difference into your pension. Because your salary is lower, you pay less income tax, employee National Insurance and student loan, and your employer pays less National Insurance (15% above £5,000).
On £45,000, a £3,000 sacrifice saves you £600 income tax and £240 National Insurance.
Is salary sacrifice better than a personal pension contribution?
Usually, yes. With relief at source you get the same income tax relief (basic rate added by the pension provider, higher-rate relief claimed through Self Assessment), but no National Insurance or student loan saving.
Salary sacrifice adds those, plus any employer National Insurance your employer passes on. On £45,000 with £3,000, that is £240 a year better with no pass-on, or £690 if your employer passes on its full saving.
How does salary sacrifice help if I earn over £100,000?
Between £100,000 and £125,140 you lose £1 of personal allowance for every £2 of income, so the effective tax rate is 60% plus 2% National Insurance. Sacrificing income in that band wins all of it back: on £110,000, sacrificing £10,000 costs £3,800 of take-home pay, about 38p for each £1 in the pension.
It can also bring back tax-free childcare and the full Child Benefit, which use the same adjusted net income.
What changes to salary sacrifice in 2029?
From 6 April 2029, pension salary sacrifice above £2,000 a year will be charged employee and employer National Insurance (National Insurance Contributions (Employer Pensions Contributions) Act 2026). Income tax relief is unchanged, and ordinary employer contributions stay free of National Insurance.
On the £3,000 example, the employee National Insurance saving would fall from £240 to £160 at today's rates. The 2029-30 rates are not set yet.
Can salary sacrifice reduce my pay below the minimum wage?
No. Your cash salary after the sacrifice must not fall below the National Minimum Wage or National Living Wage for the hours you work, so employers cap or refuse sacrifices that would. It can also reduce earnings-linked benefits such as Statutory Maternity Pay and some life cover, and a lower salary can affect a mortgage application, so check your employer's scheme rules.
Does salary sacrifice reduce my student loan repayments?
Yes. Student loan repayments are worked out on your pay after the sacrifice, so the 9% (or 6% on a Postgraduate Loan) is charged on less.
A relief-at-source contribution does not reduce them. Choose your plan above to see the effect; the 2026-27 Plan 2 threshold is £29,385.
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Further Reading
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