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 limited by the National Minimum or Living Wage floor and what your employer’s scheme will operate. The annual allowance is a separate tax-charge threshold: pension input above it may trigger a charge after any available carry-forward. It does not cap the contribution itself. 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 and your scheme will run” — with the tax consequences checked separately. The four checks below distinguish those limits from the annual allowance charge and NI relief. To model your salary and contribution, use the salary sacrifice calculator.

Check 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.

Check 2 — the annual allowance charge 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. The test covers your sacrifice, other employer and personal contributions, and any defined-benefit pension input across your pensions. Going over the available allowance can create an annual allowance charge; it does not prevent the saving.

Unused allowance from the previous three tax years can be carried forward, which can lift the amount tested without an annual allowance charge above £60,000 in a single year. Three 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 normally has a separate relevant-UK-earnings limit, with a £3,600 basic amount where applicable; salary sacrifice is an employer contribution, so that member-relief limit does not apply to it, but the annual allowance charge still applies. Third, if you have flexibly accessed a defined-contribution pension (for example by taking taxable income from drawdown), the money purchase annual allowance applies: money-purchase inputs above £10,000 a year, including the sacrifice paid in as an employer contribution, are charged, and carry-forward cannot top that £10,000 up (PTM056510). Work out the allowance you actually have with the Pension Annual Allowance calculator.

Check 3 — your employer’s scheme rules

Even where the wage floor is satisfied, 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.

Check 4 — the April-2029 NI cap

The National Insurance Contributions (Employer Pensions Contributions) Act 2026 lets regulations bring the change in from 6 April 2029. The first £2,000 a year of employee pension contributions made through salary sacrifice is to stay free of National Insurance (the first regulations must fix the limit at exactly £2,000; later ones can reduce it with both Houses’ approval); salary or bonus sacrificed above the cap would attract 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 employer’s rules allow, with any annual allowance charge considered separately. 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 under today’s rules is set out in salary sacrifice and National Insurance. From April 2029 only the first £2,000 a year is due to keep the NI saving, so this £1,000 example is unaffected, while the NI element on any excess would be lost (see salary sacrifice and the 2025 Budget).

For the mechanics of what a sacrifice is and how the contract change works, see what is salary sacrifice; for the trade-offs, 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) · PTM056510 (MPAA) · National Insurance Contributions (Employer Pensions Contributions) Act 2026 (the April-2029 NI cap, to be brought in by regulations).