Salary sacrifice pension calculator

Salary sacrifice (sometimes called salary exchange) lowers your cash pay and redirects that amount into a pension. Because Income Tax and employee National Insurance are calculated on the lower salary, your take-home pay usually falls by less than the amount sacrificed.

How it’s worked out

1. Work out take-home on your current salary (Income Tax + employee NI for 2026/27).
2. Work out take-home after subtracting the sacrifice from gross pay.
3. Tax & NI saved = sacrifice − fall in take-home pay.
4. Optional: add the employer’s NI saving (15% above the £5,000 secondary threshold) into the pension as pass-through.

Worked example

On a £50,000 salary, sacrificing £5,000 typically costs you well under £5,000 in take-home pay because you avoid basic-rate tax and 8% NI on that slice (unless you are already above the Upper Earnings Limit). Exact figures appear in the results panel.

Salary sacrifice can affect student loan deductions, mortgage affordability checks and some benefits. Your employer must offer a scheme.

Frequently asked questions

What is salary sacrifice?

You agree to reduce your cash salary and your employer pays the sacrificed amount into your pension instead. You usually pay less Income Tax and employee National Insurance on the lower salary.

What is employer NI pass-through?

When your salary falls, your employer also pays less employer NI. Some employers add some or all of that saving into your pension. Tick the option to model a full pass-through.