How much can you salary sacrifice into a pension?

There is no one “salary sacrifice limit” set by HMRC. How much you can sacrifice into a pension is bounded by four separate things, and the binding one depends on what you earn and which scheme you are in. From the bottom: you cannot sacrifice below the National Minimum or Living Wage. From the top: the contribution still has to fit inside your £60,000 annual allowance (plus any carry-forward) like any other pension input. In the middle: your employer’s scheme rules set what they will actually operate. And on the horizon: from 6 April 2029 only the first £2,000 a year of employee pension contributions through salary sacrifice will be free of National Insurance, though the contribution itself is not capped.

So the honest answer to “how much can I salary sacrifice?” is “the highest amount that clears the wage floor, fits within your annual allowance, and your scheme will run” — not a fixed number. The four boundaries below set the range. To put your own salary and contribution through them, use the salary sacrifice calculator.

Boundary 1 — the National Minimum Wage floor

Salary sacrifice is a reduction in contractual pay, so it cannot take your cash pay below the National Minimum Wage or National Living Wage (National Minimum Wage Act 1998). This is the floor, and for lower earners it is the binding limit — you can only sacrifice down to the statutory minimum for your hours, not a penny below it. An employer will refuse a sacrifice that would breach it, because the breach is theirs to answer for.

This is why salary sacrifice suits middle and higher earners better than those near the minimum wage: the gap between your salary and the NMW floor is the most you can ever give up. For a full-time worker on the minimum wage, that gap is effectively nil.

Boundary 2 — the £60,000 annual allowance (and carry-forward)

The sacrificed amount is paid into your pension as an employer contribution, so it counts towards your annual allowance like any other pension input. For 2026/27 the standard allowance is £60,000. That ceiling covers everything going in — your sacrifice, any separate employer contribution, and any personal contributions — across all your pensions for the year.

Unused allowance from the previous three tax years can be carried forward, which can lift the practical ceiling well above £60,000 in a single year if you have the headroom and the earnings to support it. Two cautions. First, the high-earner taper can cut the £60,000 allowance to as little as £10,000 — and a post-9-July-2015 salary-sacrifice arrangement is added back to threshold income, so sacrifice does not help you escape the taper even though it lowers your adjusted net income (FA 2004 s.228ZA(5)). Second, the tax relief on personal contributions is also capped at 100% of your relevant UK earnings; salary sacrifice sidesteps that earnings cap because it is an employer contribution, but the annual allowance still applies. Work out the allowance you actually have with the Pension Annual Allowance calculator.

Boundary 3 — your employer’s scheme rules

Even within the wage floor and the annual allowance, the practical limit is whatever your employer’s scheme will operate. Some cap the percentage of salary you can sacrifice; some set a minimum; some only let you change the figure at set points in the year. And whether the employer passes on its own 15% National Insurance saving — secondary Class 1 NI at 15% above the £5,000 threshold (SSCBA 1992 s.9) — is set by the scheme, not by you. That pass-on is the single biggest variable in how good a given scheme is.

None of this is a statutory limit, but in practice it is often the one that bites first for an ordinary employee. Ask your employer or scheme administrator what the scheme actually allows before you assume a number.

Boundary 4 — the enacted April-2029 NI cap

The National Insurance Contributions (Employer Pensions Contributions) Act 2026 enacts the change from 6 April 2029. The first £2,000 a year of employee pension contributions made through salary sacrifice stays free of National Insurance; salary or bonus sacrificed above the cap attracts employee and employer NI as ordinary earnings do. Income-tax relief is untouched, as is NI relief for genuine employer contributions outside salary sacrifice.

Note what this is and is not. It is not a limit on how much you can sacrifice — you could still sacrifice as much as the wage floor and annual allowance allow. It is a limit on how much of the sacrifice is free of National Insurance. Implementing regulations and HMRC payroll guidance remain outstanding. The detail is in salary sacrifice and the 2025 Budget.

A worked example

Suppose a basic-rate employee, earning comfortably above the National Minimum Wage and well within their £60,000 annual allowance, sacrifices £1,000 of salary and the employer passes on its full National Insurance saving. The sacrificed pay is never received, so it is never taxed and never carries employee National Insurance.

Within the four boundaries this employee has room to spare, so none of them binds the £1,000 — but the same figures scale up only until the first boundary is hit. The £720 fall in take-home has bought £1,150 of pension — about £1.60 in the pension for every £1 of take-home given up. The arithmetic, and how much of it survives the 2029 cap, is set out in salary sacrifice and National Insurance.

For the mechanics of what a sacrifice is and how the contract change works, see what is salary sacrifice; for whether it is the right call, is salary sacrifice worth it.

National Minimum Wage Act 1998 · FA 2004 / PTM055100 (£60,000 annual allowance) · FA 2004 s.228ZA(5) / PTM057100 (threshold-income add-back) · SSCBA 1992 s.8/s.9 (National Insurance) · National Insurance Contributions (Employer Pensions Contributions) Act 2026 (the enacted April-2029 NI cap).