About the Salary Sacrifice Calculator
With a pension salary sacrifice you agree to a lower salary and your employer pays the difference straight into your pension. Because your salary is lower, you pay less income tax, less National Insurance and, if you have one, less student loan. The pension gets the full amount, but your take-home pay drops by much less. This calculator uses the 2026/27 UK tax rates to show the exact difference for your salary.
How to use the Salary Sacrifice Calculator
- Enter your salary before any sacrifice.
- Choose whether to sacrifice a percentage of salary or a fixed amount a year, and enter it.
- Pick England, Wales or Northern Ireland, or Scotland, and any student loan plan.
- Read what each £1 into your pension costs you, and compare take-home pay with and without the sacrifice.
The formula behind it
What salary sacrifice costs you at different salaries (2026/27)
England, Wales and Northern Ireland, no student loan, compared with no pension contribution. The last column is how much take-home pay you give up for each £1 that goes into your pension.
| Salary | Sacrificed | Tax saved | NI saved | Take-home cost | Cost per £1 |
|---|---|---|---|---|---|
| £30,000 | £1,500 | £300.00 | £120.00 | £1,080.00 | 72p |
| £40,000 | £2,000 | £400.00 | £160.00 | £1,440.00 | 72p |
| £50,000 | £2,500 | £500.00 | £200.00 | £1,800.00 | 72p |
| £60,000 | £6,000 | £2,400.00 | £120.00 | £3,480.00 | 58p |
| £60,000 | £10,000 | £3,946.00 | £216.20 | £5,837.80 | 58p |
| £80,000 | £8,000 | £3,200.00 | £160.00 | £4,640.00 | 58p |
| £110,000 | £10,000 | £6,000.00 | £200.00 | £3,800.00 | 38p |
| £125,140 | £25,140 | £15,084.00 | £502.80 | £9,553.20 | 38p |
Why a basic-rate taxpayer pays 72p for each £1
On a £40,000 salary, sacrificing £2,000 saves 20% income tax (£400) and 8% National Insurance (£160), so your take-home pay falls by only £1,440 — 72p for each £1 in your pension. Higher-rate taxpayers save 40% tax plus 2% NI, so £1 costs about 58p, as long as the whole sacrifice comes off income above £50,270. On a £60,000 salary a £10,000 sacrifice crosses that line, so it costs £5,838.
Salary sacrifice and the £100,000 tax trap
Between £100,000 and £125,140 you lose £1 of personal allowance for every £2 of income, so the effective tax rate is 60% (62% with NI). Salary sacrifice lowers your income for this test. On £110,000, a £10,000 sacrifice wins back the £5,000 of allowance you had lost and costs only £3,800 of take-home pay — 38p for each £1 into your pension. If you have children, staying under £100,000 can also keep tax-free childcare and some funded childcare hours.
How to calculate salary sacrifice savings by hand
Multiply the amount you sacrifice by your income tax rate plus your National Insurance rate (plus 9% if you repay a student loan). The result is what you save; the rest is the real cost to your take-home pay.
Example: £40,000 salary, £2,000 sacrificed. Tax saved 20% × £2,000 = £400, NI saved 8% × £2,000 = £160, so take-home pay falls by £2,000 − £560 = £1,440. If part of the sacrifice crosses a band (such as £50,270), work out each part at its own rate — the calculator does this for you.
Your employer saves National Insurance too
Employers pay 15% National Insurance on earnings above £5,000 a year in 2026/27. When you sacrifice salary, your employer stops paying NI on that amount — £300 a year on a £2,000 sacrifice. Some employers add all or part of this to your pension. Tick the employer NI box in the calculator to see what that does to the cost of each £1 in your pension.
Things to check before you sign up
- Your salary after the sacrifice must not fall below the National Minimum Wage.
- A lower salary can reduce earnings-linked payments such as Statutory Maternity Pay, and may affect life cover or mortgage applications based on salary.
- Many employers also save National Insurance on the sacrificed amount and add some or all of it to your pension — ask HR, as this calculator does not include it.
- From 6 April 2029 only the first £2,000 a year of pension salary sacrifice will be free of National Insurance. The income tax saving is unchanged.
Salary sacrifice vs net pay and relief at source
With a net pay arrangement your contribution is taken before income tax, but you still pay National Insurance on your full salary. With relief at source you pay from taxed pay and the provider adds 20%. Salary sacrifice is usually the cheapest of the three for you because it also saves National Insurance. Use our take-home pay calculator to compare all three.
Examples
£110,000 salary, £10,000 sacrifice
Income tax falls by £6,000 and NI by £200, so take-home pay drops by £3,800 while £10,000 goes into your pension.
£40,000 salary, 5% sacrifice
£2,000 into your pension costs £1,440 of take-home pay (72p per £1).
Frequently asked questions
How much does salary sacrifice save?
Your income tax rate plus your National Insurance rate on the amount you sacrifice: 28% for a basic-rate taxpayer (20% + 8%), 42% for a higher-rate taxpayer (40% + 2%), and up to 62% between £100,000 and £125,140. Student loan repayers save another 9%.
Is salary sacrifice worth it on £100k?
Usually yes. On £110,000, sacrificing £10,000 restores your full personal allowance and costs only £3,800 of take-home pay.
Does salary sacrifice reduce student loan repayments?
Yes. Student loan repayments are based on your pay after the sacrifice, so they fall by 9% of the sacrificed amount (6% for a postgraduate loan) if you are above the threshold.
Is salary sacrifice changing in 2029?
Yes. From 6 April 2029, pension contributions made through salary sacrifice above £2,000 a year will be subject to employee and employer National Insurance. Income tax relief stays the same.
Does salary sacrifice affect a mortgage application?
It can. Lenders base affordability on your income, and some use your salary after the sacrifice. Check with your lender or broker before you apply.
Can I salary sacrifice for an electric car or a bike?
Many employers run salary sacrifice schemes for electric cars, bikes and other benefits. These work differently from pension sacrifice because a taxable benefit in kind may apply, so this calculator covers pension contributions only.
Can salary sacrifice take me below minimum wage?
No. Employers must make sure a salary sacrifice does not reduce your cash pay below the National Minimum Wage.
Sources
About the author: Ahmed Bilal
Ahmed Bilal is the founder of VolexTool and builds and maintains every calculator on the site. Tax rates and thresholds are taken directly from official sources such as GOV.UK, HMRC, the Canada Revenue Agency and the Australian Taxation Office, the formula is shown on every page, and each update must pass more than 600 automated checks before it goes live. Ahmed is not a tax adviser: for decisions about your own situation, speak to a qualified accountant or financial adviser.