Salary sacrifice calculator
Salary sacrifice buys pension with National Insurance you would otherwise have handed over. It is usually the right answer and it is never free — it quietly moves four other numbers in your life.
That is £39,818 a year after income tax, National Insurance and anything else coming off your pay.
- Income tax
- £7,672
- National Insurance
- £3,110
- Effective rate
- 19.6%
- Marginal rate
- 46.8%
| Year | Month | Week | Hour | |
|---|---|---|---|---|
| Gross pay | £55,000.00 | £4,583.33 | £1,057.69 | £28.21 |
| Income tax | £-7,672.00 | £-639.33 | £-147.54 | £-3.93 |
| National Insurance | £-3,110.00 | £-259.17 | £-59.81 | £-1.59 |
| Pension | £-4,400.00 | £-366.67 | £-84.62 | £-2.26 |
| Take-home pay | £39,818.00 | £3,318.17 | £765.73 | £20.42 |
The same contribution, three ways
| Method | Income tax | National Insurance | From your pay | Take-home | A month |
|---|---|---|---|---|---|
| Net pay arrangement | £7,672 | £3,110 | £4,400 | £39,818 | £3,318.17 |
| Relief at source | £9,432 | £3,110 | £3,520 | £38,938 | £3,244.83 |
| Salary sacrifice | £7,672 | £3,022 | £0 | £39,906 | £3,325.50 |
Net pay and salary sacrifice produce the same income tax; only sacrifice also cuts National Insurance, which is why it wins on take-home for an identical pot. Relief at source looks worst here because the payroll only gives you basic rate relief — a higher rate taxpayer has to claim the rest separately, and a great deal of it goes unclaimed every year.
Sacrifice has a cost that does not show up in this table. It lowers the earnings figure used for statutory maternity and sick pay, for student loan deductions, and for what a mortgage lender will consider. The salary sacrifice guide sets out the whole trade.
What sacrifice quietly changes
Your mortgage. Lenders work from the salary on your payslip, and sacrifice lowers it. Sacrificing 10% of a £55,000 salary can reduce what a lender will consider by roughly four times £5,500. If you are buying within two years, that is a real cost.
Statutory maternity and sick pay. Both are worked out on average weekly earnings in a set reference period. Sacrifice during that period reduces them, in the case of maternity pay for the whole 90%-of-earnings first six weeks.
Your student loan. This one is in your favour. Sacrifice reduces the earnings figure the deduction is based on, so it reduces the repayment too.
Your adjusted net income. Also in your favour, and sometimes dramatically. Sacrifice pulls it down, which can move you out of the Child Benefit charge or out of the Personal Allowance taper entirely.
The cap that is coming, but not yet
At the Autumn Budget in November 2025 the government announced that pension contributions made through salary sacrifice above £2,000 a year will become subject to both employee and employer National Insurance. That takes effect on 6 April 2029. It does not affect 2026/27, 2027/28 or 2028/29, so nothing on this page is discounted for it — but if you are planning several years ahead, it is the change to know about.
Questions people actually ask
Is salary sacrifice worth it?
For most people paying into a pension anyway, yes — it delivers the same pension for less take-home, because you save 8% or 2% National Insurance that a net pay arrangement does not. It is worth pausing if you are about to apply for a mortgage or about to go on maternity leave.
Does salary sacrifice reduce my pension?
No. It changes how the same contribution is routed, not its size. Your employer pays it in as an employer contribution instead of you paying it as an employee contribution.
Can I stop it?
Usually only at set points in the year or on a qualifying life event, because it is a contractual change to your salary rather than a payroll setting. Check the scheme rules before you start.
Will the 2029 National Insurance cap affect me?
Only from 6 April 2029, and only on sacrificed pension contributions above £2,000 a year. Income tax relief is not affected at all.
Related
Figures on this page are for the 2026/27 tax year (6 April 2026 to 5 April 2027) and were last checked on 29 August 2026. Every rate we use is listed on the sources page.