Salary Sacrifice Pension Calculator UK 2026/27 — Free, No Signup

Gross annual salary

Your salary before tax, NI and any pension contributions. Include bonus only if you'll also sacrifice it.

Current pension contribution

Most auto-enrolment defaults are 5%.

Proposed salary sacrifice

The total you'd sacrifice (not the increase).

Employer NI rebate My employer passes on their NI saving to my pension Some progressive UK employers pass 50–100% of the 15% employer-NI saving back. Ask HR. Most don't — leave unticked if unsure.

Student loan

Look at your most recent payslip if unsure.

Tax country

Scotland has its own income tax bands.

Tax year

Auto-detects from today's date. Change to compare years.

Yearly difference

£0/year extra into your pension or pocket

Enter your figures on the left — the comparison updates live.

Before — take-home

£0

£0/mo

After — take-home

£0

£0/mo

Before — into pension

£0

£0/mo

After — into pension

£0

£0/mo

Built for the UK numbers nobody else gets right.

Real 2026/27 rates

Employee NI 8%/2%, employer NI 15% (Secondary threshold £5,000 since April 2025), Personal Allowance taper between £100k–£125,140.

Scottish income tax

Six-band Scottish system (19% / 20% / 21% / 42% / 45% / 48%). Most UK calculators silently apply rUK bands and produce wrong answers.

Employer NI rebate

The 15% employer-NI saving that some employers pass back into your pension. Toggle on if yours does — it can add £400+/year to the total at 8% sacrifice.

All student loan plans

Plans 1, 2, 4, 5, and Postgraduate. Different thresholds, different repayment rates (9% vs 6%). Sacrifice reduces the loan deduction too.

£100k tax trap

The 60% effective marginal rate between £100k–£125,140 is where salary sacrifice is most powerful. Tool flags when you're in or near the band.

Step-by-step working

Every line of the calculation is shown below the result, in plain English. Nothing's hidden — you can verify against your payslip.

Want to see the lifetime impact?

Sacrificing 8% instead of 5% for 25 years is worth tens of thousands at retirement. Run the difference through our Monte Carlo simulator.

Open Monte Carlo →

How UK salary sacrifice actually works

Salary sacrifice is a formal arrangement between you and your employer to reduce your gross salary by an agreed amount, with the employer paying that amount directly into your pension instead. It's not extra money on top — it's a redirection. But because the redirected slice never reaches you as taxable pay, you pay no income tax and no National Insurance on it, and your employer saves their slice of NI too.

For a basic-rate taxpayer on £40,000 with an 8% sacrifice, that's roughly £640 a year of tax and NI saved compared with making the same contribution from net pay through relief-at-source. For a higher-rate taxpayer the saving is closer to £1,300. Whether your employer passes on their 15% NI saving — most don't, some do — adds another £480 on top.

What the working below shows

Beneath the result on the right, the calculator lays out the whole comparison: your taxable salary in each scenario, the income tax taken band by band, the employee NI (split into the 8% and 2% bands), any student loan deduction (9% or 6% above the relevant threshold), and the final take-home. Every number is reproducible — if HMRC's view of your payslip doesn't match the tool's, the discrepancy is almost always in one of (a) your tax code if it's not 1257L, (b) benefits in kind, or (c) a private pension paid via relief-at-source rather than sacrifice.

The £100k tax trap, and why salary sacrifice is the answer

If your taxable income lands between £100,000 and £125,140, you lose £1 of Personal Allowance for every £2 you earn over £100k. The PA is worth £12,570 × 40% = £5,028 of tax, and you lose all of it across that £25,140 band — so the effective marginal rate is 40% + 20% = 60%, or 62% with employee NI. There is no tax-efficiency play in the UK system better than salary-sacrificing income in this band straight into a pension at full 60% relief. The tool flags whenever your before-or-after taxable income falls in this range.

Things this tool deliberately doesn't model

Workplace pension matching above the auto-enrolment floor. Some employers match 1:1 or 2:1 on contributions up to a cap. If yours does, sacrificing more may unlock more "free money" — check your scheme.
Annual Allowance taper for high earners (above £260,000 of "adjusted income"). The standard £60,000 Annual Allowance tapers down to a minimum of £10,000 for very high earners. Not relevant for most users.
Money Purchase Annual Allowance. If you've already taken taxable pension income, your contribution limit drops to £10,000.
Defined benefit accrual — this tool is for DC (defined contribution) sacrifice only.
Scottish income tax bands for non-Scottish-resident earners working in Scotland — your tax country is set by HMRC based on where you live, not where you work.

Common questions

How does salary sacrifice for a pension work in the UK?

You agree with your employer to reduce your gross salary by an amount they pay directly into your pension. Because the money never reaches you as pay, no income tax or NI is taken on it. Your employer also saves 15% employer NI on the sacrificed amount — a saving some employers pass back into your pension. For an 8% sacrifice on a £40,000 salary that's roughly £640/year of tax + NI saved as a basic-rate taxpayer, or £1,300+ as a higher-rate taxpayer.

What's the difference between salary sacrifice and relief at source?

Relief at source (RAS) is the default: you pay the contribution from your net pay, and the provider claims 20% basic-rate relief from HMRC. Higher-rate taxpayers then have to claim the extra relief via Self Assessment. Salary sacrifice avoids all of that — the contribution comes out of your gross pay before any tax or NI is calculated, so the right relief is given automatically. RAS gives only income tax relief; sacrifice also saves NI.

Will salary sacrifice affect my mortgage application?

Often, yes. Lenders normally use your post-sacrifice salary for affordability. Halifax, Nationwide and Barclays have all been willing to "gross back up" on a case-by-case basis if you can produce payslips, but it's never guaranteed. If a mortgage application is imminent, pause the sacrifice or speak to a broker before committing.

Does salary sacrifice reduce my State Pension or Statutory Sick Pay?

Only if it drops you below relevant thresholds — the Lower Earnings Limit for State Pension credit (£6,396 in 2025/26), or below the £125/week Statutory Sick Pay threshold. For anyone earning over ~£12k, you're well clear.

Does salary sacrifice save me employer NI as well as employee NI?

Your employer saves the 15% employer NI on the sacrificed amount (the Secondary threshold dropped to £5,000 and the rate rose from 13.8% to 15% in April 2025). The saving belongs to the employer, but a growing number of UK companies pass some or all of it back into your pension. Always ask HR. The toggle on the calculator lets you model whichever applies to you.

How does the £100k tax trap interact with salary sacrifice?

Between £100,000 and £125,140 the Personal Allowance tapers away at £1 lost for every £2 over £100k. This creates an effective 60% marginal rate (62% with NI). Salary sacrifice that brings income below £100k restores the full PA — so contributions in this band give effective relief of 60–62%. There is no better £1-for-40p deal in the UK tax system.

Is salary sacrifice better than just paying more into my pension?

For most UK employees with an employer that offers it: yes. You get immediate income tax relief without a Self Assessment claim, you save employee NI (8% basic / 2% higher), and you may get a share of the 15% employer NI saving. Downsides: lower stated salary for mortgage and life-cover purposes, and slightly reduced eligibility-band statutory payments at very low salaries.

The full methodology and worked examples

Plain-English walkthrough of the UK 2026/27 tax bands, NI calculation, student loan thresholds, and the £100k tax trap.

Read the guide →