Salary Sacrifice Calculator
See exactly what sacrificing part of your salary into your pension really costs you in take-home pay — and how much your employer’s National Insurance saving could add to your pension if they pass it back.
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How to use this calculator
Enter your salary and the percentage you want to sacrifice, then see the real trade-off between take-home pay and pension.
Enter your salary and sacrifice %
How much of your salary you want to give up in exchange for an employer pension contribution.
Check the real cost per £1
Because sacrificed salary avoids tax and National Insurance, £1 into your pension often costs far less than £1 of take-home pay.
Tick the employer pass-back box if it applies
Some employers add their own NI saving on top, boosting your pension further at no extra cost to you — ask your payroll team if yours does this.
Why it matters
Why salary sacrifice is more efficient than paying into a pension yourself
When you sacrifice part of your salary, that amount never counts as your income at all — your employer pays it straight into your pension instead. Because it’s removed before tax and National Insurance are calculated, it avoids both entirely: 20% (or more) Income Tax and 8% employee National Insurance for most people. That means a £1 sacrifice typically costs you only around 72p in lost take-home pay, rather than the full £1 you’d have taken home and then had to pay into a pension yourself.
It also reduces your employer’s National Insurance bill — they pay 15% less on the sacrificed amount. Some employers keep that saving; others pass some or all of it back into your pension as an extra contribution, at no cost to either side. It’s always worth asking your payroll or HR team whether yours does.
The trade-off
What you give up
Salary sacrifice permanently reduces your contractual salary for as long as the arrangement runs, which can affect anything calculated from your salary — mortgage affordability assessments, life insurance multiples, statutory maternity or sick pay, and some employee benefits. It also means the money is locked in your pension until you’re able to access it, typically from your late 50s under current rules, rather than available as cash. This calculator shows the take-home and pension numbers; the salary-linked side effects are worth checking with your employer before agreeing to a sacrifice arrangement.
Questions
Common questions
Is salary sacrifice the same as a normal pension contribution?
No. A normal (“relief at source” or “net pay”) pension contribution comes out of your pay after or alongside tax, with relief added afterwards. Salary sacrifice instead reduces your actual contractual salary before tax and National Insurance are calculated, so the saving happens automatically and immediately, with no separate tax relief claim needed.
Why does my pension gain more than my take-home pay loses?
Because the sacrificed amount avoids both Income Tax and employee National Insurance, the pound-for-pound cost to you is less than a pound — typically around 72p for a basic-rate taxpayer, or less for higher earners. Your pension still receives the full sacrificed amount (and potentially more, if your employer passes back their NI saving too).
Does salary sacrifice affect my other benefits?
It can. Because your contractual salary is genuinely lower, anything based on that salary — mortgage lending assessments, statutory maternity/paternity/sick pay calculations, life assurance multiples tied to salary — may be affected. It’s worth checking with your employer or lender before starting a large sacrifice arrangement, especially close to applying for a mortgage.
Can salary sacrifice take my pay below minimum wage?
No — by law, salary sacrifice cannot reduce your pay below the National Minimum Wage or National Living Wage. Employers are required to check this before setting up an arrangement, and will cap or refuse a sacrifice that would breach it.
Does my student loan repayment change with salary sacrifice?
Yes — student loan repayments are based on your gross pay above the threshold, so reducing your salary through sacrifice reduces your repayment too, in the same way it reduces tax and National Insurance. Tick your plan above to see the effect.
Where these figures come from. Income tax, National Insurance (employee and employer) and student loan rates are taken from gov.uk for the 2026/27 tax year. All figures were checked on 23 September 2026.
Salary sacrifice and the effects on PAYE (gov.uk) · Rates and thresholds for employers 2026/27
How we calculate · Editorial policy. This is general information, not financial advice.