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Updated for the 2026/27 tax year

Salary Sacrifice Calculator

Sacrificing salary into your pension is the most efficient way to save, because it cuts income tax, National Insurance and student loan at once. This works out exactly what each pound in your pension really costs you — and what you would need to sacrifice to drop below a threshold that is costing you money.

Gross annual salary, before pension and before tax.

Where you live

Scottish income tax rates are different, which changes what sacrifice saves you.

How much to sacrifice

Include everything you sacrifice, your own contribution only — not what your employer puts in separately.

Student loan

Sacrifice reduces these too, which net pay and relief at source do not.

Other things that change the answer

Between £60,000 and £80,000 the High Income Child Benefit Charge claws it back, so sacrifice can be worth far more than it looks.

Some employers pass on part of the 15% employer NI they save. Leave blank if yours does not, or if you do not know.

Optional. Fill these in and the tool will check that your sacrifice does not push you under the minimum wage, which is not allowed.

Leave blank for the standard code.

Nothing is filled in for you, and nothing you type leaves your browser.

Enter your salary to see what sacrifice is worth.

You will get an answer once there is enough to work with, and not before.

What salary sacrifice actually is

You agree with your employer to give up part of your contractual salary, and they pay that money into your pension instead. Your gross pay is genuinely lower afterwards — that is the whole mechanism, and it is why it works.

Because the money never counts as your earnings, it escapes income tax, National Insurance and student loan repayments all at once. The other two ways of paying into a workplace pension only escape income tax. That is the entire advantage, and on a normal salary it is worth several hundred pounds a year.

Why the three methods are not the same

Salary sacrifice reduces your gross pay before anything is worked out. Tax, National Insurance and student loan are all calculated on the smaller figure.

Net pay arrangement takes the contribution off before income tax but after National Insurance is worked out. You get full income tax relief straight away, but no NI saving and no student loan saving.

Relief at source takes the contribution from your pay after tax. Your pension provider then claims 20% back from HMRC and adds it. If you are a basic rate taxpayer the end result matches net pay exactly. If you pay higher or additional rate, you have to claim the rest yourself through a tax return or by asking HMRC to change your tax code — and a great many people never do.

Where sacrifice is worth far more than it looks

The saving is not a flat percentage. It depends entirely on which pounds you are giving up, and there are bands where those pounds are being taxed at eye-watering rates.

Between £100,000 and £125,140 the personal allowance is withdrawn at £1 for every £2 earned. You lose tax-free income at the same time as paying 40% on the new earnings, so the effective rate on that band is around 60%. Sacrificing down to £100,000 buys those pounds back at 60p in the pound.

Between £60,000 and £80,000, if you claim Child Benefit, the High Income Child Benefit Charge takes it back gradually. With two or three children the effective rate on that band can beat even the 60% trap.

Just above £50,270 in England, Wales and Northern Ireland, or above the Scottish higher rate threshold, each pound crosses from 20% to 40% — or in Scotland from 21% to 42%.

Above £100,000, Tax-Free Childcare and the funded hours stop outright. That is a cliff edge rather than a taper, and for a family using nursery it can be worth more than everything else on this page put together.

The catches worth knowing

It cannot take you below the minimum wage. This is a legal floor, not a guideline: your employer must refuse a sacrifice that would breach it. Enter your hours above and this tool will check.

Your gross salary is genuinely lower. Anything calculated from gross pay is affected — mortgage borrowing, life cover set at a multiple of salary, redundancy pay, and in some schemes overtime rates. Most employers write their policies against a notional pre-sacrifice salary, but you should check rather than assume.

Statutory pay is based on your reduced earnings. Maternity, paternity and sick pay are worked out from what you actually earned in the reference period. Sacrificing heavily in the months before maternity leave can cut statutory maternity pay.

From April 2029 only the first £2,000 sacrificed each year will be free of National Insurance. Above that, both you and your employer will pay NI as normal. Income tax relief is unaffected, and nothing changes before then.

You cannot get it back. Money in a pension is locked until at least 57 for most people. Sacrifice is efficient, not liquid.

Common questions

Is salary sacrifice the same as a workplace pension?

No. A workplace pension is the scheme; salary sacrifice is one of three ways your contribution can be routed into it. The same pension can be run on any of the three, and switching between them changes your take-home pay without changing what lands in your pot.

How do I find out which one my employer uses?

Look at a payslip. Under salary sacrifice your gross pay is already reduced and there is often no separate pension line at all, or one labelled as a sacrifice. Under net pay you will see your full gross with a pension deduction below it. Under relief at source the deduction comes out lower down, after tax, and is usually 80% of the figure that reaches your pension.

Does my employer have to offer it?

No. It requires a contractual change, so it has to be offered and agreed. Employers save 15% employer National Insurance on every pound sacrificed, which is why many are happy to, and some pass part of that saving back into your pension.

Can I sacrifice a bonus?

Usually yes, if your employer allows it and the agreement is in place before you become entitled to the bonus. Sacrificing a bonus is often the most efficient single thing you can do, because a bonus tends to sit in your highest band.

Will it reduce my State Pension?

Only if it takes your earnings below the lower earnings limit, which for most people it will not. National Insurance credits toward the State Pension are earned on a qualifying-year basis, and reduced gross pay well above that limit still counts as a full year.

Does it affect Universal Credit or other benefits?

It can, and not always in the direction you expect. Means-tested benefits are assessed on earnings, so lower earnings can increase an award. This is a genuinely individual calculation that a pay calculator cannot model, and it is worth advice before acting on it.

Assumptions

Figures are annual and assume steady pay across the whole tax year, the standard tax code unless you enter another, and one job. National Insurance is worked out on an annual basis here, so a real payslip run month by month can differ by a small amount. Employer contributions are excluded from take-home because that money never passes through your payslip. The tool assumes your employer permits sacrifice down to the amount you enter, and that your scheme allows it.

Rates checked against HMRC, GOV.UK, the Scottish Government's Scottish Income Tax technical factsheet, and the GOV.UK National Minimum Wage rates table. Last verified 30 July 2026. Rates are reviewed and updated every April.

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