Salary Sacrifice Pension Calculator 2026/27
Enter your salary and how much you’d sacrifice into your pension each year — the calculator compares your take-home before and after, and shows the tax and NI you save.
How it works
Salary sacrifice reduces your contractual gross pay in exchange for an employer pension contribution of the same amount. Because the sacrificed slice never counts as earnings, you pay no income tax AND no National Insurance on it — unlike a normal personal contribution, which only gets tax relief.
The calculator runs the full 2026/27 tax and NI computation on both salaries (personal allowance £12,570, 20%/40%/45% bands, NI 8%/2%) and shows the difference. A basic-rate taxpayer sacrificing £2,000 typically sees take-home fall by only £1,440 — £2,000 goes into the pension for a real cost of £1,440.
For higher earners the effect is stronger: between £100,000 and £125,140 the personal allowance taper creates a ~60% effective rate, so sacrifice in that band can cost as little as 38p per £1 of pension. Employers also save 15% employer NI on the sacrificed amount — many pass some of this on; ask yours.
FAQ
How much does salary sacrifice actually save?
A basic-rate taxpayer saves 28p per £1 sacrificed (20% tax + 8% NI); a higher-rate taxpayer saves 42p (40% + 2%); an additional-rate taxpayer 47p. Between £100k and £125,140 the personal-allowance taper pushes the effective saving to around 62%. The calculator applies the exact band arithmetic to your figures rather than these headline rates.
Is salary sacrifice better than paying into my pension directly?
Usually yes, because a normal personal contribution only reclaims income tax, while sacrifice also avoids employee National Insurance (8% below £50,270, 2% above) — and your employer avoids 15% employer NI, which some employers add to your pension. The trade-off: your official salary is lower, which can affect mortgage applications, statutory pay and life cover based on salary.
Are there limits or downsides to salary sacrifice?
Your reduced salary must not fall below the National Minimum Wage — employers must refuse sacrifice that would breach it. Pension contributions still count towards the annual allowance (£60,000 for most people in 2026/27; tapered for high earners), and exceeding it triggers a tax charge. Sacrificed pay can also reduce entitlement to statutory maternity pay and similar earnings-based benefits.
Does salary sacrifice affect my student loan repayments?
Yes — repayments are calculated on your post-sacrifice salary, so sacrificing £2,000 cuts Plan 2 repayments by £180 a year (9%). That is a genuine extra saving on top of tax and NI while you are repaying, though it does mean the loan is paid off more slowly, which only matters if you would otherwise clear it before it is written off.