Salary sacrifice pension calculator
Compare your take-home pay with no pension contribution, a normal pension contribution, and salary sacrifice. See what you save in tax and National Insurance, and what your employer saves.
Rules last checked 13 October 2026. Tax year 2026/27.
How do you want to enter your contribution?
Assumes your pension scheme takes contributions before income tax (a net pay arrangement), the standard Personal Allowance, and equal monthly pay. England, Wales and Northern Ireland tax rates.
Enter your salary and contribution to compare your take-home pay.
Nothing you enter leaves your device. This is an estimate, not financial advice. Check your own pension scheme rules and payslip.
What is salary sacrifice?
A salary sacrifice arrangement is an agreement to reduce your entitlement to cash pay, usually in return for a non-cash benefit. Your employer changes your contract and you must agree. With a pension, your employer pays the amount you give up into your pension instead. No tax is charged on the contributions an employer pays to a registered pension scheme.
How salary sacrifice saves National Insurance
Salary sacrifice may reduce the cash earnings on which National Insurance is charged. A normal pension contribution under a net pay arrangement comes out of your pay before income tax, but National Insurance is still charged on your full pay. With salary sacrifice, your pay is lower, so both income tax and National Insurance are charged on less. Employers also pay less National Insurance.
| Employee National Insurance | 8% on monthly pay between £1,048 and £4,189, and 2% above £4,189 |
|---|---|
| Employer National Insurance | 15% above £417 a month (£5,000 a year) |
Income tax in 2026/27
For England, Wales and Northern Ireland:
| Personal Allowance | £12,570 |
|---|---|
| Basic rate | 20% on taxable income up to £37,700 |
| Higher rate | 40% from £37,701 to £125,140 |
| Additional rate | 45% above £125,140 |
| Allowance reduction | £1 for every £2 of income over £100,000 |
Scotland has different income tax rates and is not covered by this calculator.
Things to check before you sacrifice salary
- Salary sacrifice must not reduce your cash earnings below the National Minimum Wage.
- It can reduce your entitlement to earnings-related benefits, contribution-based benefits such as the State Pension, and statutory pay (for example maternity pay), so check with your employer.
- Your employer decides how salary sacrifice affects workplace pension contributions and should check with the scheme provider.
- The standard annual allowance is £60,000 for 2026/27.
The £2,000 limit from April 2029
GOV.UK says that from 6 April 2029 the amount of salary sacrificed pension contributions that is exempt from National Insurance will be capped at £2,000 a year. You can still sacrifice more, but the excess will be subject to employer and employee National Insurance like other employee workplace pension contributions. Contributions stay exempt from income tax, subject to the usual limits, and all employer pension contributions continue to be free of National Insurance. GOV.UK says legislation will follow. This does not change the 2026/27 results on this page.
What this calculator does not include
- Student loan repayments.
- Scottish income tax.
- Child Benefit charges.
- Pension schemes that take contributions after tax (relief at source).
- Your employer's own pension contributions on top.
- Changes to benefit entitlements.
- The £2,000 cap from 2029.
- The National Minimum Wage check.
Results are estimates. Your payslip is the source of truth.
Working out your NHS pay after pension? Try the NHS take-home pay calculator.
Planning to take your pension later? Try the pension drawdown calculator.
Frequently asked questions
What is salary sacrifice for a pension?
A salary sacrifice arrangement is an agreement to reduce your entitlement to cash pay, usually in return for a non-cash benefit. For a pension, your employer pays the amount you give up into your pension. Your employer changes your contract and you must agree to it.
How much National Insurance can I save with salary sacrifice?
In 2026/27 employee National Insurance is 8% on monthly pay between £1,048 and £4,189 and 2% above £4,189. Salary sacrifice reduces the pay National Insurance is charged on, so you save at those rates on the amount you give up. The calculator above shows your figure.
Do I still get tax relief with salary sacrifice?
Yes. Your pay is lower, so you pay less income tax. GOV.UK says no tax is charged on the contributions an employer pays to a registered pension scheme.
What is the difference between salary sacrifice and a normal pension contribution?
With a normal contribution under a net pay arrangement, the contribution comes out of your pay before income tax, but National Insurance is still charged on your full pay. With salary sacrifice, your pay is reduced first, so National Insurance is charged on less as well.
Does salary sacrifice save my employer money?
Yes. Employer National Insurance is 15% on pay above £417 a month in 2026/27, so when your pay falls the employer pays less. Some employers pass part of this saving on to your pension, but they do not have to.
Can salary sacrifice take me below the National Minimum Wage?
No. GOV.UK says a salary sacrifice arrangement must not reduce an employee's cash earnings below the National Minimum Wage.
Can salary sacrifice affect my benefits?
It can. GOV.UK says salary sacrifice can reduce entitlements to earnings-related benefits, contribution-based benefits such as the State Pension, and statutory pay. Check with your employer before agreeing.
Is salary sacrifice changing in 2029?
GOV.UK says that from 6 April 2029 the amount of salary sacrificed pension contributions exempt from National Insurance will be capped at £2,000 a year. Amounts above that will be subject to employer and employee National Insurance. This calculator uses the rules for 2026/27.
Sources
Rules checked against these official pages on 13 October 2026:
- GOV.UK: Salary sacrifice and the effects on PAYE
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Rates and allowances, National Insurance contributions
- HMRC National Insurance Manual: NIM02365
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Income Tax rates and allowances, current and past
- GOV.UK: Pension schemes rates and allowances
- GOV.UK: Changes to salary sacrifice for pensions from April 2029
- GOV.UK: Salary sacrifice reform for pension contributions
Read how we keep calculators accurate, or browse all UK calculators.
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