Updated to fiscal year 2026-27
UK Pension Salary-Sacrifice Calculator
See how sacrificing part of your salary into your pension cuts your income tax and National Insurance, and how little it actually costs your take-home pay.
| Without sacrifice | With sacrifice | |
|---|---|---|
| Gross salary | £60,000 | £60,000 |
| Salary sacrificed | £0 | £6,000 |
| Income tax | −£11,432 | −£9,032 |
| National Insurance | −£3,210 | −£3,090 |
| Take-home pay | £45,358 | £41,878 |
| Income tax you'd have paid | −£2,400 |
|---|---|
| National Insurance you'd have paid | −£120 |
| Real cost to your take-home | £3,480 |
| Your employer also saves NI | £900 |
| added to your pension | £0 |
| Total into your pension | £6,000 |
Annual allowance used: £6,000 of £60,000. Within your allowance.
Information
Salary sacrifice (sometimes called salary exchange) is an agreement to give up part of your gross salary in return for your employer paying the same amount straight into your pension. Because the money never counts as your earnings, you pay no income tax and no employee National Insurance on it. Your take-home pay falls by much less than the amount you sacrifice, because the rest of the "cost" is tax and National Insurance you would have paid anyway, now going into your pension instead. This calculator runs the published HMRC band tables for the tax year you pick, so the numbers match the full planner to the penny. See "Sources" below.
What you save depends on your tax band. A basic-rate taxpayer saves 20% income tax plus 8% National Insurance on the sacrificed amount, so giving up £1,000 costs about £720 of take-home. A higher-rate taxpayer saves 40% plus 2%, so the same £1,000 costs about £580. The biggest win is for anyone earning between £100,000 and roughly £125,000: sacrificing back under £100,000 restores the personal allowance you were losing, pushing the effective relief above 60%.
Your employer saves too. Employers pay 15% National Insurance on your salary, and they save that on whatever you sacrifice. Some employers add part or all of that saving to your pension. If yours does, set the share above and the calculator includes it in your total contribution.
What's modelled, and what's not. This calculator covers income tax (rUK and Scottish bands), employee and employer National Insurance, the personal allowance taper, and a warning if your contribution exceeds your pension annual allowance. It does not model the National Minimum Wage floor on sacrifice, the loss of salary-linked benefits like mortgage affordability or death-in-service cover, or the long-term growth of your pension pot. To see how this contribution compounds over your whole working life alongside the rest of your finances, click "Open full planner" to import your figures.
FAQ
- How much does salary sacrifice actually cost my take-home pay?
Less than the amount you sacrifice, because you stop paying income tax and National Insurance on it. A basic-rate taxpayer giving up £1,000 sees take-home fall by about £720; a higher-rate taxpayer by about £580. The calculator shows your exact figure for the salary and tax year you enter.
- Is salary sacrifice better than my workplace pension's normal contributions?
Usually, because salary sacrifice also saves you National Insurance, which the standard relief-at-source method does not. The income tax outcome is similar either way, but the NI saving (8% at basic rate, 2% above the upper earnings limit) makes sacrifice the more efficient route for most employees. Check whether your scheme offers it.
- What happens to my personal allowance if I earn over £100,000?
Above £100,000 you lose £1 of personal allowance for every £2 you earn, until it is gone around £125,140. Sacrificing salary lowers the income that drives this taper, so sacrificing back under £100,000 can restore the allowance and give you an effective relief rate above 60%. The calculator applies this automatically when you enter a salary in that range.
- What is the annual allowance and what happens if I go over it?
The annual allowance is the most you can pay into pensions each year with tax relief, normally £60,000, but tapered down to as little as £10,000 for very high earners. If your total contribution exceeds it, you may face an annual allowance charge unless you can carry forward unused allowance from the previous three years. The calculator warns you when you are over. The full planner can model your contribution history to work out any charge.
Sources
Disclaimer
Not financial advice. Figures are computed from the legislative tables published by HMRC and do not account for personal circumstances such as the National Minimum Wage floor on sacrifice, salary-linked benefits, or non-Class-1 NI categories. Salary sacrifice can affect mortgage affordability, statutory pay, and death-in-service cover. Consult a qualified adviser for personal financial decisions.
