Salary sacrifice calculator
Work out what a pension sacrifice really costs you in take-home pay. Most calculators show the tax saving and miss the National Insurance — which is the entire point of doing it this way.
Open the calculator →What sacrifice actually saves you
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| Into your pension | — |
|---|---|
| Your take-home falls by | — |
| So £1 of pension costs you | — |
| Tax and NI saved | — |
| Take-home a month after | — |
Why sacrifice beats a normal contribution
With an ordinary pension contribution you pay in from taxed income and reclaim the income tax. With salary sacrifice you formally give up salary and your employer pays it into the pension instead. Your contractual pay is lower, so the sacrificed amount never gets touched by income tax or employee National Insurance.
That NI saving — 8% below £50,270, 2% above — is what an ordinary relief-at-source contribution cannot give you. It is the whole reason the arrangement exists.
What £100 of pension actually costs you
| Your income | Tax saved | NI saved | Take-home cost of £100 |
|---|---|---|---|
| Basic rate (£12,571–£50,270) | 20% | 8% | £72 |
| Higher rate (£50,271–£100,000) | 40% | 2% | £58 |
| Taper band (£100,001–£125,140) | 60% effective | 2% | £38 |
| Additional rate (£125,141+) | 45% | 2% | £53 |
The taper band is the standout: because the personal allowance is withdrawn at £1 per £2 between £100,000 and £125,140, the effective income tax rate there is 60% — explained in full on the take-home pay page. Add the 2% NI and each £100 sacrificed in that band costs just £38 of take-home pay. A sacrifice that brings adjusted income back under £100,000 is one of the most tax-efficient moves available in the UK system.
Worked example: £45,000 salary, £3,000 sacrifice
| Item | Before | After sacrifice |
|---|---|---|
| Contractual salary | £45,000.00 | £42,000.00 |
| Income tax | £6,486.00 | £5,886.00 |
| National Insurance | £2,594.40 | £2,354.40 |
| Take-home | £35,919.60 | £33,759.60 |
| Into your pension | £0 | £3,000.00 |
In plain pounds:
- Gross pension contribution: £3,000
- Reduction in take-home pay: £2,160
- Income tax and NI not charged: £840 (£600 tax + £240 NI)
Put another way, every £1 of take-home you give up puts about £1.39 into the pension (£3,000 ÷ £2,160) — before any investment growth and before any employer NI share (below). For a higher-rate taxpayer the gap is wider; for someone earning under £12,570 there is no tax saving at all.
Salary sacrifice, net pay and relief at source are different. Salary sacrifice lowers your contractual salary, so income tax, National Insurance and student-loan repayments all fall. A net pay arrangement takes the contribution before income tax only — NI is still charged on your full salary. Relief at source takes the contribution from taxed pay and your provider adds basic-rate relief; higher-rate relief is claimed through self assessment. The take-home pay calculator models all three.
Ask your employer about their NI saving
Your employer saves employer's National Insurance at 15% on every pound you sacrifice — on the £3,000 above, that is £450 they no longer pay. Some employers add part or all of that saving to your pension; many keep it. It costs nothing to ask, and a "we pass on 50% of the employer NI saving" policy meaningfully changes the arithmetic in your favour.
The downsides, honestly
Your contractual salary is genuinely lower. That is not a technicality — several things key off it.
- Mortgage applications — lenders assess the reduced salary. If you are applying for a mortgage in the next year, time the sacrifice carefully.
- Statutory pay — maternity, paternity and sick pay are calculated on the lower figure.
- Life cover and redundancy — anything defined as a multiple of salary shrinks with it.
- Minimum wage floor — sacrifice cannot legally take your pay below the National Minimum Wage, which caps how much lower earners can use it.
- Pension access age — the money cannot normally be taken until the minimum pension age — 55 today, 57 from 6 April 2028. This is long-term saving, not a flexible account.
Your salary and pension figures stay in your browser — no account, no server copy, nothing stored anywhere but your own device.
Common questions
How is this different from a normal pension contribution?
A relief-at-source contribution reclaims income tax but not employee NI. Sacrifice avoids both, because the salary is never paid to you in the first place.
Can I sacrifice into anything other than a pension?
Some employers offer cycle-to-work, ultra-low-emission car schemes and similar. Since 2017 most other benefits no longer carry the tax advantage — pensions remain the main case.
Is this financial advice?
No. It shows the arithmetic. Whether sacrifice suits you depends on your mortgage plans, benefits and cash-flow needs — free impartial guidance is available from MoneyHelper, and this page is not a substitute for it.
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