Salary sacrifice calculator
Work out what giving up part of your salary for a pension contribution actually costs you. Enter your salary and how much you want to sacrifice to see the drop in your take-home pay, the income tax and National Insurance it saves, and what lands in your pension. Switch between Scotland and the rest of the UK, and compare sacrifice against paying the same amount into a normal workplace pension.
Where the saving comes from
Your employer
Employers are not obliged to share the National Insurance they save. Plenty do, and it is worth asking, because it costs them nothing they were not already paying.
Sacrifice against the alternatives
The same money, handled three ways. A workplace pension here means a net pay arrangement, where your contribution comes out of your pay before income tax.
| No pension | Workplace | Sacrifice | |
|---|---|---|---|
| Take-home pay | £0 | £0 | £0 |
| Into your pension | £0 | £0 | £0 |
| Total value to you | £0 | £0 | £0 |
| Employer NI bill | £0 | £0 | £0 |
One limit this calculator cannot check for you: sacrifice cannot take your pay below the National Minimum Wage. That needs your contracted hours, so check the floor with your employer if your reduced salary is anywhere near it.
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OpenHow this is calculated
- We start with your salary before any sacrifice, and the part of the UK you live in, because Scotland sets its own income-tax bands.
- We take off the amount you want to sacrifice. That money is never paid to you as salary, so it drops out of the pay figure used for income tax, for National Insurance and for student loan repayments.
- We work out your Personal Allowance on the reduced figure, tapering it if your income is still over £100,000, then apply your region income-tax bands to what is left.
- We work out your Class 1 National Insurance on the reduced pay, at 8% between £12,570 and £50,270 and 2% above that.
- If you have a student loan, we take 9% of the reduced pay over your plan threshold, and 6% again for a postgraduate loan.
- We run the same steps twice more: once with no pension contribution at all, and once with the same amount going into a normal workplace pension. That gives the two comparisons, because a saving only means something measured against an alternative.
- Your employer saves 15% National Insurance on the sacrificed pay. If they pass any of it on, we add that to your pension.
- The headline figure is the drop in your take-home pay divided by the total going into your pension: what £1 of pension actually costs you.
Frequently asked questions
How much does salary sacrifice actually save?
On a basic-rate salary in the rest of the UK you save 20% income tax and 8% National Insurance, so £1 in your pension costs you 72p of take-home pay. At higher rate the saving is 40% plus 2% National Insurance, so the same £1 costs 58p. Scottish rates differ at every band, and the calculator uses whichever set applies to you.
What is the difference between salary sacrifice and a normal pension contribution?
Both get you income tax relief. Only salary sacrifice cuts your National Insurance, because you never contractually earn the money in the first place. That National Insurance saving is the whole advantage, and it is worth 8% of the sacrificed amount below the Upper Earnings Limit of £50,270 and 2% above it.
Does salary sacrifice reduce my student loan repayments?
Yes. Student loan repayments are charged on the same pay figure as National Insurance, so sacrificing salary lowers them too. On Plan 2 that is another 9% of the sacrificed amount, and a postgraduate loan adds 6% on top. Tick your plan in the calculator to see it.
Is there a limit on salary sacrifice?
Your pay after sacrifice cannot drop below the National Minimum Wage, which is the binding limit for most lower earners. Total pension contributions are also capped by the Annual Allowance, £60,000 in 2026/27. From 6 April 2029 a third limit arrives: only the first £2,000 sacrificed each year will be free of National Insurance.
What is the £2,000 salary sacrifice cap from 2029?
From 6 April 2029, National Insurance relief on sacrificed pension contributions is capped at £2,000 a year. You can still sacrifice more, and the income tax relief is unchanged, but anything above £2,000 attracts employee and employer National Insurance. That caps the employee saving at around £160 a year and the employer saving at around £300. It was announced at Autumn Budget 2025 and is now law.
What else does salary sacrifice affect?
Your contractual salary is genuinely lower, so it can reduce how much a lender will lend you, statutory maternity and paternity pay, redundancy pay and some state benefits. Death-in-service cover and overtime rates are sometimes calculated on the reduced figure too. Check what your employer pins to "salary" before you sign up.
If you are weighing a pension contribution against your take-home pay, a plain-English UK personal-finance handbook is the natural next read.
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This calculator is for general guidance only. It does not replace advice from a tax adviser or a regulated financial adviser on your personal circumstances.
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