Salary Sacrifice Calculator
See exactly how much Income Tax and National Insurance you save by sacrificing salary into your pension. Enter your gross salary and contribution percentage; the calculator shows the new take-home, the tax + NI saved, and the full pension contribution that reaches your pot.
Sacrifice inputs
Enter your annual gross + the % you want to sacrifice. Add a student loan plan if applicable.
| Item | Without sacrifice | With sacrifice |
|---|---|---|
| Gross salary | — | — |
| Pension contribution | — | — |
| Income Tax | — | — |
| National Insurance | — | — |
| Student loan | — | — |
| Net take-home (annual) | — | — |
| Cost per £100 to pension | — | |
How salary sacrifice saves tax and NI
Salary sacrifice converts part of your gross salary into employer pension contribution before any tax is calculated. Both Income Tax and National Insurance are saved on the sacrificed amount — making sacrifice the most tax-efficient way to contribute to pension in the UK.
The per-£100 economics
| Tax band | Tax + NI saved per £100 | Take-home cost per £100 |
|---|---|---|
| Basic rate (£12,571–£50,270) | 20% + 8% = 28% | £72 |
| Higher rate (£50,271–£125,140) | 40% + 2% = 42% | £58 |
| Allowance taper (£100,001–£125,140) | 60% + 2% = 62% | £38 |
| Additional rate (above £125,140) | 45% + 2% = 47% | £53 |
So a higher-rate taxpayer puts £100 into pension at a cost of only £58 of take-home. Someone in the £100k allowance-taper band puts £100 into pension at a cost of just £38.
Combined with student loan
Salary sacrifice also reduces threshold-relevant income for student loan calculations. For borrowers just above their plan threshold, sacrifice can eliminate the student loan deduction entirely — adding 9% (or 6% PGL) to the savings.
What salary sacrifice can affect
- Mortgage borrowing capacity — lenders use stated gross salary. Sacrifice reduces it.
- Statutory maternity/paternity/sick pay — calculated on the reduced gross.
- Life insurance via employer — if linked to salary, may be lower.
- Auto-enrolment threshold — sacrificing below £6,240 (lower earnings limit) reduces minimum employer contribution.
For most workers the tax + NI saving substantially outweighs these. For borrowers about to apply for a mortgage, sometimes worth pausing sacrifice for 3-6 months to maximise stated income.
FAQs
How much tax can I save with salary sacrifice?
Basic-rate taxpayer: £28 saved per £100 sacrificed. Higher-rate: £42. In the £100k allowance taper: £60+. Additional-rate: £47. The pension still receives the full £100.
Is salary sacrifice better than personal pension contributions?
Almost always yes. Sacrifice skips both Income Tax AND NI. Personal contributions get tax relief but you've already paid NI on the money. The NI saving (8% for most workers, 2% above upper limit) is the differentiator.
Does salary sacrifice reduce my student loan?
Yes — sacrifice reduces gross before student loan is calculated. For borrowers near plan threshold, sacrifice can eliminate the deduction entirely.
What about NI above the upper earnings limit?
Above £50,270 the employee NI rate drops to 2%. Sacrifice still skips it — saving 42% combined (40% Income Tax + 2% NI) per £100. Below the upper limit, the saving is 28%.
Do I need my employer to offer salary sacrifice?
Yes — it's voluntary for employers. Most large UK employers offer it. If yours doesn't, net-pay pension gives similar Income Tax savings but no NI saving.
Related calculators
- Take-Home Pay Calculator — full Income Tax + NI + pension breakdown
- Pension Impact Calculator — compare contribution methods
- Bonus Tax Calculator — sacrifice the bonus into pension
- Pension projection — long-term pot projection
- Student Loan Calculator — Plan 1/2/4/5/PGL
Related guides
- Salary sacrifice calculator guide — full guide to this calculator
- Salary sacrifice explained — mechanism + worked examples
- Is salary sacrifice worth it? — decision framework