Salary sacrifice calculator
Updated Updated for 2026 tax law
Compare salary sacrifice with net pay and relief-at-source pension contributions for 2026/27: what each really costs you, how much reaches your pension, and what your employer saves.
| Method | Take-home / yr | Real cost to you | Into pension |
|---|---|---|---|
| No pension | £35,920 | — | £0 |
| Salary sacrifice | £34,300 | £1,620 | £2,250 |
| Net pay arrangement | £34,120 | £1,800 | £2,250 |
| Relief at source | £34,120 | £1,800 | £2,250 |
Sacrifice can’t take your pay below the National Minimum Wage, and lower contractual pay can reduce mortgage affordability, statutory pay and life cover based on salary. From 6 April 2029 only the first £2,000 a year sacrificed into a pension will be free of NI; for 2026/27 there is no cap.
How to use the salary sacrifice calculator
- Enter your salary before any sacrifice and where you live.
- Enter the contribution as a percentage of pay or as pounds a year.
- Add your student loan plan — sacrifice lowers those repayments too.
- Tick the box if your employer adds its NI saving to your pension.
- Compare the real cost of each method in the table.
Three ways to pay into a workplace pension
| Method | How it works | Tax relief | NI saving |
|---|---|---|---|
| Salary sacrifice | You give up salary; your employer pays it into the pension | Full, immediately | Yes — you and your employer |
| Net pay arrangement | Taken from pay before tax | Full, immediately | No |
| Relief at source | Taken from pay after tax; provider adds 20% | 20% automatic; higher rates claimed via Self Assessment | No |
Worked example — £45,000, 5% contribution: with salary sacrifice your salary becomes £42,750. Tax falls from £6,486 to £6,036 and NI from £2,594.40 to £2,414.40, so £2,250 in the pension costs you £1,620. Through a net pay scheme it would cost £1,800.
Salary sacrifice above £100,000
Sacrifice is most powerful in the allowance taper. On £110,000, sacrificing £10,000 brings income back to £100,000, restores the full £12,570 Personal Allowance and cuts take-home by only £3,800 — the pension gets £10,000 for an effective cost of 38p per pound. If you have children, it can also reduce the High Income Child Benefit Charge.
What you can sacrifice
- Pensions — the most common, and still fully NI-free in 2026/27.
- Cycle to work and electric car schemes — save tax and NI on the bike or car (electric cars have a low benefit-in-kind charge).
- Childcare vouchers — closed to new joiners since October 2018.
Your total pension input, including your employer’s, should stay within the £60,000 annual allowance (lower for very high earners or if you’ve already drawn a pension flexibly).
Related tools
- UK salary calculator
- Scotland salary calculator
- Income Tax calculator
- National Insurance calculator
- Student loan repayment calculator
- Hourly to annual salary
- £30,000 after tax
- £40,000 after tax
- £50,000 after tax
- £60,000 after tax
- £100,000 after tax
Sources
Every rate and threshold on this page is for the 2026/27 tax year (6 April 2026 to 5 April 2027) and was checked against these official pages on 18 October 2026:
- Rates and thresholds for employers 2026 to 2027 (HMRC)
- Income Tax rates and allowances for current and previous tax years (HMRC)
- Scottish Income Tax: rates and bands 2026 to 2027 (Scottish Government)
- Income Tax in Scotland (GOV.UK)
- Marriage Allowance (GOV.UK)
- Repaying your student loan: what you pay (GOV.UK)
- When your student loan gets written off or cancelled (GOV.UK)
- Tax codes (GOV.UK)
- Annual allowance (GOV.UK)
- Changes to salary sacrifice for pensions from April 2029 (HM Treasury/HMRC)
Disclaimer: Estimates for information only — not tax or financial advice. Results are annual figures for a single employment paid evenly through the year. Payroll applies thresholds per pay period and rounds some deductions, so your payslip can differ by a few pounds. Check your tax code and personal tax account on GOV.UK.
Frequently asked questions
How much does salary sacrifice save?
On a £45,000 salary, sacrificing 5% (£2,250) into a pension reduces take-home pay by only £1,620 — you save £450 Income Tax and £180 NI. Your employer saves £338 in employer NI.
Is salary sacrifice better than a net pay pension?
Usually, because you save NI as well as tax. In the same example a net pay scheme costs you £1,800 against £1,620 with sacrifice.
Is salary sacrifice being capped?
From 6 April 2029, only the first £2,000 a year of pension contributions made by salary sacrifice will be free of National Insurance. There is no cap in 2026/27, and Income Tax relief isn’t affected.
Are there downsides to salary sacrifice?
Your contractual salary is lower, which can affect mortgage applications, life cover and statutory pay worked out from earnings. Your pay can’t go below the National Minimum Wage (£12.71 an hour from April 2026 for workers aged 21 and over).
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Estimates for information only — not tax, legal or financial advice.