Salary Sacrifice Cap
Calculator 2029
See how the £2,000 National Insurance cap on pension salary sacrifice, in force from 6 April 2029, changes the NI you and your employer pay.
Read the full answer — method, rates and figures
Quick answer: From 6 April 2029, only the first £2,000 a year you sacrifice into a pension is free of National Insurance, under the National Insurance Contributions (Employer Pensions Contributions) Act 2026 (Royal Assent 29 April 2026). Sacrifice above £2,000 attracts employee NI (8% below £50,270, 2% above, at 2026-27 rates) and 15% employer NI.
Income Tax relief is unchanged. Example: £45,000 salary, £4,500 sacrificed — about £200 a year more employee NI and £375 more employer NI.
What changes for salary sacrifice in April 2029?
From 6 April 2029 only the first £2,000 a year you sacrifice into a pension is free of National Insurance; you and your employer pay NI on anything above it. Income Tax relief does not change. The cap is set by the National Insurance Contributions (Employer Pensions Contributions) Act 2026, which received Royal Assent on 29 April 2026.
Include any bonus you exchange for a pension contribution.
Your NI saving today
£360
Your NI saving from 2029
£160
Extra NI you pay a year
£200
£17 a month
Extra employer NI a year
£375
£2,500 of your £4,500 sacrifice is above the £2,000 cap and becomes subject to National Insurance from 6 April 2029. Income Tax relief on the full amount is unchanged.
Assumption: uses 2026-27 National Insurance rates and thresholds (employee 8% from £12,570 to £50,270 and 2% above; employer 15% above £5,000) because the 2029-30 figures are not set. Annual calculation — the regulations may apply the limit per pay period. Sources: National Insurance Contributions (Employer Pensions Contributions) Act 2026, s.1 (legislation.gov.uk); HMRC policy paper, Salary sacrifice reform for pension contributions (4 December 2025); HM Treasury, Changes to salary sacrifice for pensions from April 2029 (26 November 2025). Educational tool, not financial advice.
Last reviewed 16 September 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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Under salary sacrifice you agree to a lower salary and your employer pays the difference into your pension. Today the sacrificed amount escapes Income Tax and National Insurance for both you and your employer. From 6 April 2029, the National Insurance exemption covers only the first £2,000 sacrificed in a tax year.
The calculator works out your NI-able earnings twice: today (salary minus everything you sacrifice) and from 2029 (salary minus at most £2,000). The difference in employee NI is what you lose; the difference in employer NI is what your employer pays. Income Tax is not affected, so it is left out of both.
Worked example: a £45,000 salary with £4,500 sacrificed. Today NI-able pay is £40,500, so employee NI is (£40,500 − £12,570) × 8% = £2,234. From 2029 NI-able pay is £43,000, so employee NI is (£43,000 − £12,570) × 8% = £2,434 — about £200 a year more. The employer pays 15% on the same £2,500, about £375.
Who is affected by the £2,000 salary sacrifice cap?
Anyone sacrificing more than £2,000 a year into a pension. The table applies 2026-27 National Insurance rates to each case — the higher your salary, the smaller your own extra NI (2% above £50,270), but the employer's 15% stays the same.
| Salary / sacrifice | Extra NI: you | Extra NI: employer |
|---|---|---|
| £30,000 / £1,500£0 above cap | £0 | £0 |
| £30,000 / £3,000£1,000 above cap | £80 | £150 |
| £45,000 / £4,500£2,500 above cap | £200 | £375 |
| £60,000 / £2,000£0 above cap | £0 | £0 |
| £60,000 / £6,000£4,000 above cap | £80 | £600 |
| £100,000 / £10,000£8,000 above cap | £160 | £1,200 |
Annual figures at 2026-27 NI rates and thresholds. The 2029-30 rates have not been set.
What stays the same after April 2029
- Income Tax relief on pension contributions made through salary sacrifice, subject to the usual annual allowance.
- National Insurance relief on ordinary employer pension contributions that are not made through salary sacrifice.
- The first £2,000 a year you sacrifice remains free of employee and employer NI.
- The effect of salary sacrifice on adjusted net income, used for the Child Benefit charge, the Personal Allowance taper and Tax-Free Childcare.
Comparing salary sacrifice with net pay and relief at source today? Use the pension tax relief comparator.
How to use this calculator
- Enter your gross annual salary before any salary sacrifice.
- Enter the total you sacrifice into your pension in a tax year, including any bonus you exchange for a pension contribution.
- Read the two columns: the employee National Insurance you save today, and what you would save under the £2,000 cap from 6 April 2029.
- Check the employer line too — employers pay 15% NI on the same excess, which may affect what they offer.
❓ Frequently Asked Questions
What is the £2,000 salary sacrifice cap?
From 6 April 2029, only the first £2,000 a year of salary or bonus you sacrifice into a pension stays free of National Insurance. Anything you sacrifice above £2,000 is treated as earnings for Class 1 National Insurance, so both you and your employer pay NI on the excess.
Income Tax relief on the whole contribution is unchanged, and employer pension contributions that are not paid through salary sacrifice stay NI-free.
Is the salary sacrifice cap law or just a proposal?
It is law. The National Insurance Contributions (Employer Pensions Contributions) Act 2026 received Royal Assent on 29 April 2026.
The Act applies from the 2029-30 tax year and requires the first regulations to set the limit at £2,000 a year. The detailed operation, including any per-pay-period equivalent, will be set out in those regulations; HM Treasury has said further guidance will be published before April 2029.
How much extra National Insurance will I pay?
It depends on how much you sacrifice above £2,000 and where your salary sits. Below £50,270 the employee rate on the excess is 8%; above £50,270 it is 2% (at 2026-27 rates).
For example, on a £45,000 salary sacrificing £4,500 a year, £2,500 becomes NI-able: about £200 more employee NI and about £375 more employer NI a year. On £60,000 sacrificing £6,000, the employee pays about £80 more and the employer about £600 more.
Should I stop salary sacrificing above £2,000?
Not automatically. Contributions above £2,000 still get full Income Tax relief and still go into your pension; you only lose the National Insurance saving on the excess.
For a higher-rate taxpayer the employee NI at stake is 2% of the excess, so the Income Tax relief is still worth far more. Whether your employer changes its matching or passes on its own extra NI is a separate question for your employer.
This is general information, not financial advice.
Does the cap apply to employer pension contributions?
Only to contributions made through salary sacrifice (or bonus sacrifice). HM Treasury's guidance says all employer pension contributions will continue to be free of NI; the cap applies where you give up salary or a bonus in exchange for an employer contribution.
Salary sacrifice for other benefits, such as cycle-to-work schemes, is not part of this measure.
Does it change what counts for Child Benefit or Tax-Free Childcare?
No. The government's policy paper says the measure does not change the effect of salary sacrifice on adjusted net income, which is what the High Income Child Benefit Charge, the Personal Allowance taper and Tax-Free Childcare eligibility use. You can still sacrifice to bring adjusted net income down — any sacrifice above £2,000 simply attracts National Insurance from April 2029.
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Further Reading
Your pension is one part of your net worth
Richify tracks your workplace pension next to your ISAs, property and savings, so a change like the 2029 cap shows up in the whole picture. Free to start.
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