Salary sacrifice calculator
Salary sacrifice means contractually giving up pay in exchange for your employer paying it into your pension instead. Because the sacrificed pay never reaches you, it escapes both income tax and National Insurance: which makes it the cheapest way to fill a pension, and the reason £1 in the pot can cost as little as 58p of take-home.
6.7% of salary
2026/27 rates, checked 2026-08-28. No student loan, add one on the main calculator.
£3,000 goes into your pension. Your take-home falls by only
£2,160.00
Each £1 in the pot costs you £0.72 of take-home.
Before and after
| No sacrifice | With sacrifice | |
|---|---|---|
| Salary for tax purposes | £45,000.00 | £42,000.00 |
| Income tax | −£6,486.00 | −£5,886.00 |
| National Insurance | −£2,594.40 | −£2,354.40 |
| Into your pension | £0 | £3,000.00 |
| Take-home | £35,919.60 | £33,759.60 |
Getting the same £3,000 into your pot by relief at source would cost £2,400.00 from taxed pay up front (the provider adds the basic-rate 20%), with higher-rate relief claimed back later, and it saves no National Insurance. Sacrifice is the only arrangement that does.
How the saving breaks down
A basic-rate taxpayer saves 20% income tax plus 8% National Insurance on every pound sacrificed, each £1 in the pot costs 72p. A higher-rate taxpayer saves 40% plus 2%: 58p per £1. Between £100,000 and £125,140, the personal allowance taper pushes the effective saving above 60%, so a sacrifice in that range can cost less than 38p per £1, the strongest pension incentive anywhere in the UK system.
What else changes when you sacrifice
- Student loans: repayments are worked on post-sacrifice pay, so sacrificing also cuts your loan repayment (9% of the amount for most plans).
- Statutory pay: maternity pay, sick pay and mortgage affordability are assessed on your reduced contractual salary. Sacrifice cannot take you below the National Minimum Wage.
- Childcare and the £100k cliff: sacrifice reduces adjusted net income, so it can restore free childcare hours and Child Benefit as well as allowance.
The 2029 cap
From April 2029 the government has announced that salary sacrifice above £2,000 a year will no longer be exempt from National Insurance. Contributions above the cap will still save income tax, but the NI advantage, the thing that makes sacrifice unique, will be limited. Until then, the full saving applies, contributions made before 2029 keep an advantage the same contributions made after it will not. Whether front-loading fits your situation is an advice question, not an arithmetic one.
Sacrifice vs the other two arrangements
A net pay contribution comes out before tax but after NI is worked out, it saves tax only. Relief at source comes out of taxed pay; your provider reclaims basic-rate relief, and higher-rate taxpayers must claim the rest through self-assessment (many never do). Only sacrifice saves NI. The main calculator models all three so you can see the difference on your own numbers.
2026/27 HMRC rates, checked 2026-08-28. Sources and method on the about page. This is a calculation, not financial advice, sacrifice is a contract change and worth checking against your own scheme rules.