Salary Sacrifice Calculator

See how much you save on tax and National Insurance through salary sacrifice for the 2025/26 tax year.

Your Details

Your annual salary before any deductions

Annual equivalent: £3,600.00

The type of benefit you are sacrificing salary for

Some employers pass their NI saving into your pension

Scotland has different income tax bands

Your Annual Tax Saving

£1,008.00

You save £720.00 in income tax and £288.00 in National Insurance

Monthly Sacrifice

£300.00

£3,600.00 per year

Real Monthly Cost

£216.00

After tax and NI savings

Employer NI Saving

£540.00

Your employer saves too

Side-by-Side Comparison

 Without SacrificeWith Sacrifice
Gross Pay£45,000.00£41,400.00
Income Tax£6,486.00£5,766.00
Employee NI£2,594.40£2,306.40
Net Pay£35,919.60£33,327.60

Total Going to Your Pension

£3,600.00/year

That's £300.00 per month into your pension pot

Salary sacrifice is one of the most tax-efficient ways to boost your pension. Your £300.00 monthly sacrifice only costs you £216.00 in take-home pay. The remaining £84.00 is covered by tax and NI savings.

This calculator is for informational purposes only and does not constitute financial advice. Tax calculations are based on current HMRC rates and may not reflect your exact circumstances. Always consult a qualified financial adviser.

How does salary sacrifice work in the UK?

Salary sacrifice is an arrangement between you and your employer where you agree to give up part of your gross salary in exchange for a non-cash benefit, most commonly an enhanced pension contribution. Because the sacrifice is made before tax and National Insurance are calculated, both you and your employer pay less in contributions. For the 2025/26 tax year, employees pay 8% NI on earnings between £12,570.00 and £50,270.00, meaning a basic-rate taxpayer saves 20% income tax plus 8% NI on every pound sacrificed -- a 28% saving. Higher-rate taxpayers save even more at 40% plus 2% NI.

Employers also benefit because they no longer pay 15% employer NI on the sacrificed amount. Many employers pass some or all of this saving into the employee's pension, further boosting the value of the arrangement. Beyond pensions, salary sacrifice is available for childcare vouchers (for those with existing entitlements), the Cycle to Work scheme, and ultra-low emission company cars. It is important to note that salary sacrifice reduces your official gross salary, which could affect mortgage applications, statutory pay entitlements, and some state benefits. Always check with your employer or a financial adviser before entering into a salary sacrifice arrangement.

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Capital at risk. Pension rules apply. Tax treatment depends on individual circumstances and may change in the future.