Salary Sacrifice Calculator
See what a pension sacrifice actually costs. The calculator applies 2026/27 UK tax bands and National Insurance to show how little of your take-home pay a 5% sacrifice really takes.
Why £100 into your pension costs you £72
Salary sacrifice swaps gross pay for pension contributions. Because the money never touches your payslip, you save income tax at your marginal rate and National Insurance on every pound sacrificed — and your employer saves NI too, which many pass on as an extra contribution.
| Salary | 5% sacrificed | Tax + NI saved | Take-home drops | Effective cost |
|---|---|---|---|---|
| £30,000 | £1,500 | £420 | £1,080 | 72% |
| £50,000 | £2,500 | £700 | £1,800 | 72% |
| £60,000 | £3,000 | £1,260 | £1,740 | 58% |
At higher rates the deal improves further: a 40% taxpayer keeps 42p of every sacrificed pound after NI, and the calculator applies the exact 2026/27 bands — 20% / 40% / 45% with the £12,570 personal allowance and its taper above £100,000.
What salary sacrifice can pay for
Pension is the classic, but the same mechanism covers cycle-to-work schemes, electric-car leases and childcare vouchers. The tax logic is identical: gross pay falls, so tax, NI and any student loan deduction all shrink with it.
Trade-offs to know
Sacrificed salary is still part of your pension package, but a lower gross pay can affect mortgage applications, life cover, statutory pay and employer pension matching. Check the floor — HMRC requires your pay to stay at or above the National Minimum Wage after sacrifice.
Frequently asked questions
How does salary sacrifice save tax?
The sacrificed amount never appears as your pay, so you pay no income tax and no National Insurance on it. For a basic-rate taxpayer every £100 sacrificed costs only £72 of take-home pay.
What's the difference between salary sacrifice and a personal pension contribution?
A personal contribution is paid from net pay and gets relief added by your pension provider. Sacrifice reduces gross pay directly, so you also save the 8% or 2% National Insurance that relief does not cover.
Does salary sacrifice affect my student loan?
Yes — Plan 2 repayments are charged on gross pay above the repayment threshold, so a lower gross salary means smaller student loan deductions too.
What are the risks of salary sacrifice?
Lower gross pay can reduce mortgage borrowing capacity, death-in-service cover, statutory maternity or paternity pay, and any salary-linked benefits. Pay must also stay above the National Minimum Wage.