💷 Free UK Calculator · 2026/27

Salary Sacrifice Calculator
Tax & NI Savings

Enter your salary and pension contribution to see exactly how much income tax and National Insurance you save through salary sacrifice.

Your details

£
%
0%10%20%30%
Some employers add their NI saving (15%) into your pension
Used to check National Minimum Wage limit
28%
Basic rate saving
(20% tax + 8% NI)
42%
Higher rate saving
(40% tax + 2% NI)
60%
£100k–£125k trap
sacrifice eliminates it

Your savings

Item Before After sacrifice
Gross salary £35,000 £33,250
Income tax £4,486 £4,136
National Insurance £1,794 £1,654
Take-home pay £28,720 £27,460
Tax & NI saving — £756/yr
🏦 Your pension receives: £1,750/yr
Your sacrifice contribution. Your take-home only falls by £994 — the tax and NI savings offset the rest.
⚠️ Warning: This sacrifice level would bring your hourly rate below the National Living Wage (£12.21/hr for workers aged 21+). Your employer cannot legally apply a sacrifice at this level. Reduce the sacrifice amount.
🎯 60% tax trap opportunity: Your salary is in the £100,000–£125,140 band where your personal allowance tapers. Sacrificing would bring your adjusted net income to £100,000 and eliminate the 60% marginal rate — saving significantly more than the standard rate.

Based on 2026/27 HMRC rates. Assumes standard 1257L tax code, England/Wales rates. Results are estimates — speak to your HR team or a financial adviser for your specific scheme.

What is salary sacrifice?

Salary sacrifice (also called salary exchange) is a formal agreement between you and your employer to reduce your gross salary by a set amount, in exchange for a non-cash benefit of equal value — most commonly additional pension contributions.

Because the sacrifice happens before income tax and National Insurance are calculated, you pay both taxes on a smaller salary. That is the key difference from making a personal pension contribution from your net pay — with salary sacrifice you save NI too, not just income tax.

For every £100 you sacrifice as a basic rate taxpayer, you only lose £72 from your take-home pay. The other £28 is tax and NI that you would have paid to HMRC anyway — and it now goes into your pension instead.

Common salary sacrifice schemes

🏦

Pension contributions

The most widely used scheme. Your employer pays the sacrificed amount directly into your workplace pension, on top of their standard contribution.

Basic rate: save 28p per £1 · Higher rate: save 42p per £1
⚡

Electric vehicle lease

Lease an electric car through your employer. EVs have a very low Benefit-in-Kind rate (3–4% in 2026/27), making the net cost significantly lower than a personal lease.

Typically 30–50% cheaper than a personal lease
🚲

Cycle to Work

Hire a bicycle and safety equipment tax-free through your employer. Maximum £1,000 under standard schemes, more for e-bikes with some employers.

Saves 28–42% on the retail price depending on your tax band
👶

Childcare vouchers

Closed to new applicants since October 2018, but existing members can continue. Tax-Free Childcare (gov.uk scheme) is the current alternative for new claimants.

Legacy scheme only — check Tax-Free Childcare for new claims

Things to watch out for

Frequently asked questions

A basic rate taxpayer (earning under £50,270) saves 28p for every £1 sacrificed — 20p income tax plus 8p National Insurance. A higher rate taxpayer saves 42p per £1. So if you sacrifice £3,000 per year as a basic rate payer, your take-home pay only falls by £2,160, while your pension receives the full £3,000.
Yes, for most employees. With salary sacrifice, you save both income tax AND National Insurance on the sacrificed amount. With a personal pension contribution (relief at source), you only reclaim income tax — not NI. For a basic rate taxpayer this means salary sacrifice is worth 28% in combined savings vs 20% for a personal contribution. The difference is even more pronounced for higher rate taxpayers.
It can. Some mortgage lenders assess affordability based on your post-sacrifice salary, which will be lower. However, many lenders now accept your pre-sacrifice reference salary. Always check with your mortgage adviser before making large changes, especially if you are planning to apply for a mortgage soon.
No — this is illegal. Your post-sacrifice cash pay cannot fall below the National Living Wage (£12.21 per hour from April 2025 for workers aged 21+). The calculator above warns you if your sacrifice would breach this limit based on a standard 37.5-hour working week.
Statutory payments are based on your gross earnings. If your gross salary is reduced through salary sacrifice, these payments may also be reduced. Many employers use a notional salary (your pre-sacrifice salary) for these calculations — check your employment contract or HR team to confirm.
Between £100,000 and £125,140, your personal allowance tapers by £1 for every £2 of income — creating an effective 60% marginal tax rate. Salary sacrifice into a pension reduces your adjusted net income. If you earn £105,000 and sacrifice £5,000, your adjusted net income falls to £100,000 and you avoid the trap entirely, saving thousands in tax.

See your full take-home pay

Use the full salary calculator to add pension, student loan, and other deductions for a complete picture.

Open salary calculator →

📋 Source: All figures based on HMRC published rates for the 2026/27 tax year. For official rates visit gov.uk/income-tax-rates and gov.uk/national-insurance-rates. Results are estimates — not financial advice.