Salary Sacrifice Calculator for 2026/27
This salary sacrifice calculator shows what a pension salary sacrifice does to Income Tax, National Insurance and take-home pay in the 2026 to 2027 tax year, with the working for every figure. It also shows the employer’s National Insurance saving and what happens when the employer passes some of it into the pension.
This page gives general information for employees and HR teams in the UK. It is not tax or financial advice. Nothing you enter leaves this page.
How does salary sacrifice work?
Under salary sacrifice you agree to a lower contractual salary, and your employer pays the amount you gave up into your pension as an employer contribution. Some schemes call it salary exchange. Income Tax and National Insurance are then worked out on the lower salary.
The Income Tax saving is the same as you would get on a pension contribution taken from pay before tax. The extra saving is National Insurance, for you and for your employer. That is why a pension salary sacrifice calculator needs to show both National Insurance figures.
Worked example on £35,000: salary sacrifice calculator, pension mode
An employee in England earns £35,000 and sacrifices 5%, which is £1,750 a year. The employer keeps its own National Insurance saving.
- Before: Income Tax is 20% of £22,430, which is £4,486.00. Employee National Insurance is 8% of £22,430, which is £1,794.40. Take-home pay is £28,719.60.
- After: pay is £33,250. Income Tax is 20% of £20,680, which is £4,136.00. Employee National Insurance is 8% of £20,680, which is £1,654.40. Take-home pay is £27,459.60.
- Take-home pay falls by £1,260.00 and £1,750.00 goes into the pension. Each £1 in the pension costs £0.72 of take-home pay.
- The employer saves 15% of £1,750, which is £262.50. If it passed on all of that, £2,012.50 would go into the pension and each £1 would cost £0.63.
Enter 35000 and 1750 in the calculator at the top of this page and it gives the same figures.
Salary sacrifice National Insurance savings
The employee saving depends on where the sacrificed pay sits. Pay between £12,570 and £50,270 carries employee National Insurance at 8%. Pay above £50,270 carries 2%. Someone on £60,000 who sacrifices £5,000 saves only 2% of it, which is £100.00, because all of the sacrificed pay is above £50,270. The employer saves 15% in both cases.
Things lower pay can affect
- Statutory payments such as maternity pay and sick pay are based on average earnings after the sacrifice. GOV.UK says salary sacrifice can reduce them, and can remove entitlement if earnings fall below the lower earnings limit of £6,708 a year.
- A lower salary can mean you qualify for a smaller mortgage, and life cover from your employer can be lower if it is based on salary. MoneyHelper explains these points.
- Cash pay after the sacrifice must not fall below the National Minimum Wage.
What this salary sacrifice calculator UK version leaves out
It assumes a standard tax code, one job, no other income, no student loan and National Insurance category A. It uses annual figures, so a payslip can differ by a few pounds. It does not check the pension annual allowance. It does not compare salary sacrifice with a relief at source pension, where tax relief is added by the pension provider and higher rate relief is claimed separately.
Change announced for April 2029. At the Budget on 26 November 2025 the government announced that from 6 April 2029, pension contributions made through salary sacrifice above £2,000 a year will no longer be free of National Insurance. Employee and employer National Insurance will be due on the amount above £2,000. Income Tax relief does not change, and ordinary employer pension contributions stay free of National Insurance. The detail is to be set in legislation. Nothing changes for 2026 to 2027. Source: GOV.UK policy paper, published 4 December 2025. Checked on 8 October 2026.
Rates used: tax year 2026 to 2027
Every figure in this calculator comes from the official pages linked below. They apply from 6 April 2026 to 5 April 2027. Checked on 8 October 2026.
| Item | 2026 to 2027 figure | Source |
|---|---|---|
| Personal Allowance | £12,570 a year | GOV.UK Income Tax rates |
| Personal Allowance above £100,000 | Goes down by £1 for every £2 of adjusted net income above £100,000. It is zero at £125,140 or above. | GOV.UK income over £100,000 |
| Income Tax in England, Wales and Northern Ireland | Basic rate 20% on £12,571 to £50,270. Higher rate 40% on £50,271 to £125,140. Additional rate 45% above £125,140. | GOV.UK Income Tax rates |
| Income Tax in Scotland | Starter rate 19% on £12,571 to £16,537. Basic rate 20% on £16,538 to £29,526. Intermediate rate 21% on £29,527 to £43,662. Higher rate 42% on £43,663 to £75,000. Advanced rate 45% on £75,001 to £125,140. Top rate 48% above £125,140. | GOV.UK Income Tax in Scotland |
| Employee Class 1 National Insurance (category A) | 0% up to the primary threshold of £12,570 a year. 8% from £12,570 to the upper earnings limit of £50,270. 2% above £50,270. The same across the UK. | GOV.UK rates and thresholds for employers 2026 to 2027 |
| Employer Class 1 National Insurance (category A) | 15% on earnings above the secondary threshold of £5,000 a year | GOV.UK rates and thresholds for employers 2026 to 2027 |
| Lower earnings limit | £6,708 a year, £129 a week | GOV.UK rates and thresholds for employers 2026 to 2027 |
| National Minimum Wage, from 1 April 2026 | £12.71 an hour aged 21 and over (National Living Wage). £10.85 aged 18 to 20. £8.00 under 18. £8.00 apprentice rate. | GOV.UK National Minimum Wage rates |
| Salary sacrifice and the minimum wage | A salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage. | GOV.UK salary sacrifice and the effects on PAYE |
Questions about salary sacrifice
How does salary sacrifice work?
You agree with your employer to give up part of your gross pay, and the employer pays that amount into your pension as an employer contribution. Your contract changes, so tax and National Insurance are worked out on the lower pay. On a £35,000 salary with £1,750 sacrificed, this salary sacrifice calculator shows take-home pay falling by £1,260.00 a year while £1,750.00 goes into the pension.
How much National Insurance do you save with salary sacrifice?
In 2026 to 2027 an employee saves 8% of the amount sacrificed on pay between £12,570 and £50,270, and 2% on pay above £50,270. The employer saves 15% on pay above £5,000. On £1,750 sacrificed from a £35,000 salary the employee saves £140.00 and the employer saves £262.50.
Is salary sacrifice for pensions changing in 2029?
Yes. The government announced at the Budget on 26 November 2025 that from 6 April 2029 only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance. Employee and employer National Insurance will be due on the amount above £2,000. Income Tax relief on pension contributions does not change. The rules for 2026 to 2027 have no cap, and this calculator uses the 2026 to 2027 rules.
Can salary sacrifice take my pay below the minimum wage?
No. GOV.UK guidance says a salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage. From 1 April 2026 the rate is £12.71 an hour for people aged 21 and over. Enter your weekly hours and the calculator checks your pay after the sacrifice against the rate for your age.
What happens if I sacrifice salary when I earn over £100,000?
The Personal Allowance goes down by £1 for every £2 of adjusted net income above £100,000. Salary sacrifice lowers your pay, so it can bring some or all of the allowance back. On a £105,000 salary in England, Wales or Northern Ireland, sacrificing £5,000 cuts Income Tax by £3,000.00 and employee National Insurance by £100.00, so take-home pay falls by £1,900.00.
Does this work as a car salary sacrifice calculator?
Only in part. It is not a car salary sacrifice calculator or an EV salary sacrifice calculator, because a company car has its own benefit-in-kind tax that this tool does not work out. The other benefit option shows the tax and National Insurance on the pay given up, which fits a benefit such as cycle to work. For a car, ask the scheme provider for a quote that includes benefit-in-kind tax.
Use this salary sacrifice calculator to see how a sacrifice changes tax, National Insurance and take-home pay for 2026/27. It shows employer NI savings and the 2029 pension cap, and it shows the working.