Take-home reduction
£0The annual hit to your net pay.
UK pension and tax tool
Salary Sacrifice Calculator
Estimate how sacrificing part of your salary into your pension can affect take-home pay, Income Tax, National Insurance, employer NI give-back and the £100,000 Personal Allowance taper.
2026/27 rules reviewed£100k taper modelled
Your situation
Uses UK 2026/27 tax rates and bands for England, Wales and Northern Ireland. Employer NI give-back is the percentage of employer NI savings that your employer adds to your pension ; leave at 0 if you're not sure; some larger employers pass on 50-100%.
What the sacrifice actually costs you
Into your pension
£0Sacrificed amount plus any employer NI give-back.
£ in pot per £1 net cost
;Higher is better. The number above 1 is "free" money from tax and NI savings.
Your effective marginal rate will appear here.
Save or share this scenario
The page URL captures everything you've entered above. Copy it to come back later or share these inputs with someone.
How different sacrifice levels compare at your salary
The cost-to-pension ratio is the key number. A 1.50× ratio means you get £1.50 in your pension for every £1 of take-home pay you give up.
| Annual sacrifice | Take-home reduction | Into your pension | Ratio |
|---|
The ratio often improves as you move from basic-rate into higher-rate tax, and can be especially strong inside the £100,000–£125,140 Personal Allowance taper band.
Understanding the calculator inputs
Seven inputs cover the full UK tax stack. The employer NI give-back is the one most calculators ignore.
Gross annual salary
Your salary before any deductions, pension or tax. This is the figure shown in your contract or offer letter, not your take-home.
Existing pension contribution
The percentage you already contribute via salary sacrifice. The calculator assumes this is already happening before your new sacrifice.
Additional sacrifice
The new annual amount you're considering sacrificing on top of any existing contribution.
Employer NI give-back
The percentage of your employer's NI saving they add back to your pension. Most employers keep it; some larger ones pass on 50-100%. Check your scheme rules.
Investment return
A realistic annual return on the pension pot. 5-7% is a common range for a long-term, equity-heavy pension portfolio.
Years until retirement
Used only to project the future pot from the new contribution. Doesn't affect the headline tax and NI calculations.
The 60% tax trap ; and why salary sacrifice can help
This is the single most powerful application of salary sacrifice in the UK system. Almost no online calculator surfaces it clearly.
Between £100,000 and £125,140 of income, HMRC withdraws your Personal Allowance at the rate of £1 for every £2 you earn over £100k. Combined with 40% income tax and 2% National Insurance, this creates an effective marginal tax rate of around 62% on income in this band.
That's the bad news. The good news is that salary sacrifice works in reverse: if you sacrifice income that would otherwise have been taxed at 62%, you save roughly 62p of tax on every £1. So a £1 contribution into your pension effectively costs you only about 38p of take-home pay.
Try the calculator at a £110,000 salary with a £10,000 sacrifice. The take-home reduction is around £3,800. That is the single best tax outcome the UK system allows, short of an employer-NI give-back arrangement on top.
Salary sacrifice efficiency by income band
The same sacrifice gives a different result at different income levels because of where it sits in the UK tax structure.
Basic-rate band
~£14k - £50k20% income tax + 8% NI = 28% combined. £1 sacrificed costs ~72p of take-home. Decent, but the headline win is the long-term pension growth.
Higher-rate band
£50k - £100k40% income tax + 2% NI = 42% combined. £1 sacrificed costs ~58p. The threshold every UK earner should think hardest about.
60% trap band
£100k - £125,14040% tax + 2% NI + Personal Allowance taper = ~62% effective. £1 sacrificed costs ~38p. The highest-return tax move in the UK system.
Additional-rate band
£125,140+45% income tax + 2% NI = 47% combined. £1 sacrificed costs ~53p. Still very attractive.
The often-missed employer NI saving
Every £1 your employer doesn't pay you also saves them National Insurance. Whether you see any of it depends on your scheme.
When you sacrifice £1 of salary, your employer saves 15% (2026/27 rate) on top of the tax and NI you save. On a £6,000 sacrifice that's £900 of employer NI saving. Some employers keep it entirely as a cost reduction. Others pass on 50% or even 100% as additional pension contribution.
If you don't know what your scheme does, ask. The difference between a 0% give-back and a 100% give-back on the same sacrifice is striking ; the cost-to-pension ratio in the calculator above will jump substantially when you enter a give-back percentage. It's the single most valuable thing to negotiate or check in a salary sacrifice arrangement.
Things to watch out for
Salary sacrifice is generally efficient, but it has side effects worth understanding before increasing contributions.
Mortgage affordability
Lenders use your reduced salary, not your "pre-sacrifice" salary. Heavy sacrifice can limit your borrowing capacity.
Statutory benefits
Statutory maternity, paternity and sick pay are calculated on your reduced salary. Worth considering if these are likely to apply.
Pension lock-up
Money sacrificed into a pension can't be accessed until age 55 (rising to 57 in April 2028). If you might need it sooner, this matters.
Annual allowance
Total pension contributions (yours + employer) are capped at £60,000 per year for most people, less if your income is very high. Excess is taxed.
Lifetime allowance check
The Lifetime Allowance was abolished in 2024, but a new Lump Sum Allowance limits tax-free withdrawals to £268,275. Very large pots may still face restrictions.
Minimum wage
You can't sacrifice below the National Minimum Wage. This usually only affects lower earners considering large percentage sacrifices.
Common salary sacrifice mistakes
The maths is favourable. Getting the implementation right matters too.
Not checking employer NI give-back
This can be valuable. If your employer shares NI savings and you have not included it, the contribution may look less efficient than it really is.
Sacrificing into the wrong band
A contribution that reduces income through the £100,000–£125,140 taper band can be more efficient than a contribution made entirely within a normal higher-rate band.
Ignoring the annual allowance
The £60k cap is generous but not unlimited. Senior employees with employer matches and bonuses can hit it without realising.
Forgetting locked-up money
If you're under 35 and don't have other savings, locking everything into a pension can leave you stranded if life happens before 55.
Not modelling retirement tax
The pot isn't tax-free at withdrawal. 25% is tax-free, 75% is taxed at your retirement marginal rate. Big pots can mean big retirement tax bills.
Treating it as guaranteed
Rates and bands change. Re-run the calculation annually and especially after Budget changes.
Salary Sacrifice FAQs
The questions that come up most often when working through the trade-off.
What is salary sacrifice?
You agree to a lower salary in exchange for the employer paying the same amount directly into your pension. The money never reaches you as salary, so you don't pay income tax or NI on it.
What is the 60% trap?
Between £100k and £125,140, your Personal Allowance is withdrawn at £1 for every £2 of income above £100k. Combined with 40% tax and 2% NI, the effective marginal rate hits ~62% ; making salary sacrifice exceptionally efficient at these incomes.
Should I always max out my pension?
Up to a point. Salary sacrifice is highly efficient at higher tax bands, but money is locked until age 55 (57 from April 2028). If you might need access sooner, balance with ISA savings.
Will salary sacrifice affect my mortgage application?
Yes ; lenders look at your reduced gross salary. If you're applying soon, weigh the long-term efficiency against short-term borrowing capacity.
Do all employers offer salary sacrifice?
Most UK employers with workplace pensions do. The structure of the scheme varies, especially around employer NI give-back. Check your scheme documentation or HR.
Is the calculator current?
It uses UK 2026/27 tax rates for England, Wales and Northern Ireland and was last reviewed on 19 May 2026. Always verify against GOV.UK/HMRC before making decisions, particularly around Budget time when changes are announced.
Sources, assumptions and review date
Last reviewed: 19 May 2026. This calculator uses 2026/27 UK tax rules for England, Wales and Northern Ireland. Scottish income tax bands can differ.
- Income tax: Personal Allowance £12,570; basic rate to £50,270; higher rate to £125,140; additional rate above £125,140.
- Personal Allowance taper: reduced by £1 for every £2 of adjusted net income above £100,000, reaching zero at £125,140.
- Employee Class 1 NI: 8% between the Primary Threshold and Upper Earnings Limit, then 2% above the Upper Earnings Limit.
- Employer Class 1 NI: 15% above the Secondary Threshold. Employer NI give-back is only included if you enter it.
- Pension annual allowance: usually £60,000, but it may be lower for very high earners or if the Money Purchase Annual Allowance applies.
Primary sources: GOV.UK Income Tax rates and Personal Allowances, GOV.UK National Insurance rates and thresholds, and GOV.UK pension scheme rates.