Salary Sacrifice Calculator
Paying into your pension by salary sacrifice cuts your income tax and National Insurance at once. Set your salary and how much you'd put in, and we'll show what it really costs your take-home.
England · 2026/27
Why salary sacrifice beats a normal pension contribution
A normal pension contribution gets income-tax relief: put in £100 and the income tax you'd have paid on it comes back. Salary sacrifice goes one better. Because the money never lands as salary, it skips National Insurance too — yours, and often your employer's. That second saving is why the same contribution costs your take-home less through sacrifice than through a personal pension or SIPP.
The size of the saving tracks your top tax rate. A basic-rate earner gets back 20% income tax plus 8% NI on the sacrificed pay. A higher-rate earner gets 40% plus 2%. And anyone caught in the £100,000 personal-allowance taper gets the most of all, because each pound sacrificed there claws back both 40% tax and the allowance it had taken away.
The £100,000 trap, and how sacrifice gets you out
The calculator's headline is the rate on your last pound, before and after. For most salaries that's a tidy 28% or 42%. In the £100,000–£125,140 band it jumps to about 62%, because every extra pound there strips away 50p of your tax-free personal allowance. Dropping back below £100,000, for instance by sacrificing into a pension, brings the rate down to 42%, so a pound into your pension there can cost your pocket less than 40p. That's why, on the maths, this band is the most tax-efficient stretch to sacrifice from.
£3,800 of take-home puts a full £10,000 into your pension. On £110,000, sacrifice the £10,000 above £100,000: it all lands in your pension, while your pay drops by only about £3,800.
Common questions
How does pension salary sacrifice work?
- You agree to give up part of your salary, and your employer pays that amount straight into your pension instead. Because it never counts as salary, you pay no income tax and no National Insurance on it. That's the difference from a normal pension contribution — you save NI as well as income tax, so the same money costs your take-home less.
Salary sacrifice vs a SIPP or personal pension — which saves more?
- A SIPP or personal pension gets you income-tax relief, but not the National Insurance saving. Salary sacrifice saves both — employee NI (8% or 2%), and often the employer's 15% NI too if they pass it on. For the same money into your pension, salary sacrifice costs your take-home less. The trade-off is flexibility: a sacrifice is arranged through your employer, a SIPP you control yourself.
What is the £100,000 tax trap?
- Between £100,000 and £125,140 of income, you lose £1 of your tax-free personal allowance for every £2 you earn. That hidden withdrawal pushes your effective rate on that band to about 60% (62% once National Insurance is in), even though the headline rate is 40%. Sacrificing enough salary to drop back under £100,000 is the main way to escape it, which is why relief in this band is so high.
How much can I sacrifice into my pension?
- Most people can put up to £60,000 a year into pensions with tax relief (the annual allowance), across all contributions. You also can't sacrifice below the National Minimum Wage — your employer won't let your salary drop under it. Very high earners can have a lower, tapered annual allowance, so check yours before sacrificing a large amount.
Will salary sacrifice affect my mortgage?
- It can. Mortgage lenders usually look at your post-sacrifice salary, so giving up a chunk of pay can lower how much they'll lend. If you're about to apply for a mortgage, it's worth weighing the pension gain against the borrowing you might want first.
Is this calculator up to date?
- It uses England's income-tax bands, personal allowance and National Insurance rates for 2026/27. One change is coming that isn't in these figures: from April 2029 the employer NI relief on salary-sacrificed pension contributions is capped at £2,000 a year. We've deliberately left that out so today's numbers stay correct — we'll fold it in when it takes effect.
Keep going
See your full take-home after tax, NI, pension and student loan — the number this tool starts from.
London cost-of-living calculator →What your take-home actually covers once rent, bills and travel land.
Is £50k enough to live in London? →Put a salary to the test against a real London month.