← Calculators/Tax year 2026/27·Last reviewed 12 Jun 2026

salary sacrifice pension calculator

What a pension salary sacrifice really does: take-home barely moves — because you save income tax AND National Insurance — while the pension jumps, with the employer's NI saving on top if they pass it on.

Free, no sign-up. Runs the same engine and the same versioned tax-year config the signed-in suite uses — nothing leaves your browser. How we verify the numbers.

Tax yearTax residence

Gross salary

Other taxable income (optional)

Pension in payment, property, etc. — taxed, but not subject to NI.

Employer passes on its NI savingChildren you claim Child Benefit for

Sacrifice into the pension£10,000

Sacrificing £10,000.00

costs your take-home £3,800.00

but puts £11,500.00 into your pension (incl. a £1,500.00 employer NI top-up) — an effective uplift of 302.6%.

Now (no sacrifice)

Take-home (after tax + NI): £72,357.40
Income tax: £33,432.00
Employee NI: £4,210.60
Personal allowance: £7,570.00
Into the pension (this route): £0.00

With £10,000.00 sacrificed

Take-home (after tax + NI): £68,557.40
Income tax: £27,432.00
Employee NI: £4,010.60
Personal allowance: £12,570.00
Into the pension: £11,500.00

Dropping your adjusted net income also restores £5,000.00 of personal allowance. See the full £100k / 60% tax-trap picture.

Salary sacrifice is an employer pension contribution toward your £60,000 annual allowance, and a post-9-July-2015 arrangement is added back to threshold income — so it reduces adjusted net income (rescuing the allowances above) but does not relieve the tapered annual allowance. It also lowers the salary-linked reference for death-in-service cover, statutory maternity/redundancy pay and mortgage affordability.

For planning and illustration purposes only · Verify all inputs against source documents · This tool does not constitute financial or tax advice.

— In short

Salary sacrifice swaps part of your gross salary for an employer pension contribution. You stop paying income tax andemployee National Insurance on the amount given up — so your take-home falls by much less than the amount sacrificed — and the whole sum (often plus the employer's own NI saving) goes into your pension. Because it also lowers adjusted net income, it can restore a tapered personal allowance, child benefit or childcare.

— How it's calculated

Income tax and National Insurance — the saving most tools miss

A personal (relief-at-source) contribution saves income tax but not National Insurance. Salary sacrifice saves both: the salary you give up is never paid, so no income tax and no employee NI are charged on it. The take-home fall is therefore the amount sacrificed minus the income tax saved (at your marginal rate) minus the employee NI saved (8% between the primary threshold and the upper earnings limit, 2% above it).

ITEPA 2003 (employment income) · SSCBA 1992 s.8 · HMRC NIM01001

The employer NI saving — and whether they pass it on

Because the salary is reduced, the employer also saves secondary (Class 1) National Insurance — 15% on the band above the £5,000 secondary threshold from 6 April 2025 (13.8% / £9,100 in 2024-25). Many employers add that saving to the pension contribution; the toggle above models 0%, 50% or 100% pass-through. (The Employment Allowance, which can offset some employer NI, is not modelled — this is the gross per-employee saving.)

SSCBA 1992 s.9 · NICs (Secondary Class 1 Contributions) Act 2025

The threshold rescue: personal allowance, child benefit, childcare

Sacrifice reduces adjusted net income, so where it crosses a threshold it does double duty: between £100,000 and £125,140 it reinstates the personal allowance (the 60% band); between £60,000 and £80,000 it claws back the High Income Child Benefit Charge; and dropping below £100,000 restores Tax-Free Childcare and funded hours. The tool flags the allowance and child benefit regained, and links to the full tax-trap picture.

ITA 2007 s.35 (PA taper) · ITEPA 2003 s.681B–H (HICBC)

Annual allowance: it does NOT escape the taper

Two things advisers conflate. The sacrifice counts as an employer contribution toward your £60,000 annual allowance, and — for arrangements set up on or after 9 July 2015 — it is added back to threshold income for the tapered annual allowance test. So salary sacrifice reduces adjusted net income (helping the personal allowance, HICBC and childcare) but does not reduce threshold income and cannot relieve the AA taper. The tool flags if total pension input may exceed the available allowance.

FA 2004 s.228ZA(5) · PTM057100 · PTM044100

Guardrails

Salary sacrifice cannot take pay below the National Minimum/Living Wage, and it lowers the salary-linked reference used for death-in-service cover, statutory maternity and redundancy pay, and mortgage affordability. Scottish taxpayers: the income-tax saving uses the Scottish non-savings bands (toggle above); National Insurance is UK-wide.

National Minimum Wage Act 1998 · gov.scot Scottish income tax rates

— Worked example

rUK · 2025/26 · £110,000 salary · £10,000 sacrificed · employer NI passed on in full

Income tax saved (40% + personal-allowance reinstated): £6,000
Employee NI saved (2% above the UEL): £200
Fall in take-home (the real cost): £3,800
Employer NI saving passed into the pension: £1,500
Total into the pension: £11,500
Effective uplift (pension ÷ take-home cost): 302.6%

Figures computed live by the same engine the tool above runs. At £110k the £10k sacrifice also reinstates the full £12,570 personal allowance (the 60% band), which is why £3,800 of take-home buys £11,500 of pension.

— Frequently asked questions

How much does salary sacrifice actually save?

On the amount you sacrifice you save income tax at your marginal rate and employee National Insurance (8% between the primary threshold and the upper earnings limit, 2% above it). A basic-rate taxpayer sacrificing £1,000 sees take-home fall by about £720 (saving £200 tax + £80 NI) while £1,000 — plus any employer NI passed on — goes into the pension. A relief-at-source contribution would save the £200 tax but not the £80 NI.

Does salary sacrifice save National Insurance?

Yes — that is the key difference from a personal pension contribution. The salary you give up is never paid, so neither employee NI nor income tax is charged on it. The employer also saves secondary (employer) NI at 15% above £5,000 (from 6 April 2025), which they may add to your pension contribution.

Does salary sacrifice help with the £100,000 / 60% tax trap?

Yes. Salary sacrifice reduces adjusted net income, so between £100,000 and £125,140 it reinstates the personal allowance (an effective 60% saving), claws back the High Income Child Benefit Charge between £60,000 and £80,000, and restores Tax-Free Childcare and funded hours once income drops below £100,000.

Does salary sacrifice avoid the tapered annual allowance?

No. A salary-sacrifice arrangement set up on or after 9 July 2015 is added back to threshold income for the tapered annual allowance, so it does not reduce threshold income and cannot relieve the taper — even though it does reduce adjusted net income for the personal allowance, child benefit and childcare. The sacrifice also counts as an employer contribution toward your £60,000 annual allowance.

What are the downsides of salary sacrifice?

It cannot reduce your pay below the National Minimum or Living Wage, and it lowers the salary figure used for some salary-linked benefits — death-in-service cover, statutory maternity and redundancy pay, and mortgage affordability assessments. The pension is also locked away until at least age 55 (57 from 2028).

— When you're ready

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— Related

For planning and illustration purposes only · Verify all inputs against source documents · This tool does not constitute financial or tax advice.