UK Salary Sacrifice Calculator

It saves you both Income Tax and employee National Insurance at your marginal rate. For 2026-27 that is 28% for a basic-rate earner (20% tax plus 8% NI) and 42% for a higher-rate earner (40% plus 2%). On a £60,000 salary sacrificing £10,000, your take-home falls by £5,838 while £10,000 goes into the pension — an effective relief rate of about 41.6%, because most of the sacrifice comes out of the 42% band and a small slice out of the 28% band.

National Insurance. A normal personal contribution is made from pay that has already suffered National Insurance, so you get Income Tax relief but never recover the NI. Under salary sacrifice the money never becomes your pay at all, so it escapes both. For a higher-rate taxpayer that is a 2 percentage point difference; for a basic-rate taxpayer it is 8 points. Salary sacrifice also delivers the higher-rate relief immediately through payroll rather than requiring a Self Assessment claim.

There is no separate limit on sacrifice itself, but three constraints bite. The annual allowance caps total tax-relieved pension input each year, and is tapered for high earners. Sacrifice cannot reduce your pay below the National Minimum Wage, which is a hard legal limit your employer must enforce. And your employer's scheme rules may impose their own cap. Check your annual allowance position on our [pension annual allowance calculator](/resources/calculators/uk-pension-annual-allowance) before agreeing a large sacrifice.

More than anything else available. Between £100,000 and £125,140 the Personal Allowance is withdrawn by £1 for every £2 of income, producing an effective marginal Income Tax rate of 60% and, with National Insurance, a 62% marginal deduction. Sacrificing income out of that band recovers the allowance pound for pound, so every £100 sacrificed costs about £38 of take-home pay. Someone on £125,140 sacrificing £25,140 gets their entire Personal Allowance back. Model it on our [60% tax trap calculator](/resources/calculators/uk-60-percent-tax-trap-calculator).

No, and many do not. Your employer saves 15% secondary Class 1 National Insurance on everything you sacrifice, which on a £10,000 sacrifice is £1,500 a year of pure saving to them. Some employers pass all of it into your pension, some share it, many keep it. It is entirely a matter of scheme design, it is very rarely advertised, and it is worth asking about directly — a full pass-through raises the value of the arrangement by 15% at no cost to you.

It can, and this is the most common practical objection. Lenders assess affordability on your reduced contractual salary, because that is what your payslip and employment contract now say, so sacrificing £10,000 from a £60,000 salary means most lenders will assess you on £50,000. Some lenders will add pension contributions back for affordability purposes, but not all. If you are applying for a mortgage in the next twelve months, it is usually worth pausing or reducing the sacrifice first and restarting afterwards.

Yes. Statutory payments including maternity, paternity and sick pay are calculated on your post-sacrifice earnings, so a sacrifice in the qualifying period reduces them. Redundancy pay, death-in-service cover and overtime rates are also frequently calculated on reference salary, which may be the reduced figure depending on how the arrangement is drafted. Good schemes define a notional pre-sacrifice reference salary for exactly these purposes — check whether yours does before you sacrifice heavily.

Only if it takes your earnings below the level at which you are credited with a qualifying year of National Insurance. For most people sacrificing into a pension, earnings remain comfortably above that level and the State Pension entitlement is unaffected. The risk is real for lower earners and for people sacrificing very large proportions of a modest salary, since dropping below the lower earnings limit breaks the qualifying year. If you are near that level, check before agreeing the arrangement.

Yes, and it is one of the most effective uses of it. The charge is based on adjusted net income, and a salary sacrifice reduces that figure directly because the money never becomes your income. Someone earning £70,000 who sacrifices £10,000 brings adjusted net income to £60,000 and can remove or substantially reduce the charge, while also getting full relief on the contribution. Model the effect on our [High Income Child Benefit Charge calculator](/resources/calculators/uk-hicbc-calculator).

Not abolished, but capped from April 2029. At Autumn Budget 2025 the government announced that from 6 April 2029 the National Insurance exemption on salary-sacrificed pension contributions will be limited to £2,000 a year, with anything above that treated as an ordinary employee contribution and subject to both employee and employer National Insurance. Income Tax relief is unaffected, so sacrifice still beats a personal contribution on tax — it simply loses the NI advantage above £2,000. GOV.UK has published the policy detail on [changes to salary sacrifice for pensions from April 2029](https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029).

For most higher earners, yes, all else being equal — the NI saving above £2,000 has a known expiry date, so the years to April 2029 are the cheapest they will be. But the annual allowance still applies, the money is locked up until the minimum pension age, and the affordability and statutory pay consequences above do not change. The cap is a reason to bring forward sacrifice you were going to make anyway, not a reason to make sacrifice you cannot afford.

Yes, and bonus sacrifice is usually the single most efficient version of it, because a bonus typically sits entirely in your top marginal band. The critical requirement is timing: the sacrifice must be agreed in writing before you become contractually entitled to the bonus. Once entitlement arises, the money is your earnings and it is too late — HMRC will tax it as pay regardless of where it is subsequently directed. Our [bonus tax calculator](/resources/calculators/uk-bonus-tax-calculator) shows the comparison.

The principle works identically, but the numbers differ. This calculator uses the Income Tax rates and bands for England, Wales and Northern Ireland. Scotland sets its own rates and bands, with additional intermediate and advanced bands and a higher top rate, so the Income Tax saving from a Scottish taxpayer's sacrifice will be different — and generally larger at some income levels. National Insurance is UK-wide and identical, as is the £100,000 Personal Allowance taper, so those parts of the result hold everywhere.

Usually only at set points or on a lifestyle event. Because sacrifice is a variation of your employment contract rather than a payroll instruction, most employers allow changes annually at a scheme window, or on events such as marriage, a birth, redundancy of a partner, or a move to part-time work. HMRC expects the arrangement to be a genuine contractual change rather than something switched on and off at will. Ask about the scheme's change rules before committing to an amount you may need to reduce.

Very differently from how it looks on the UK side, and this catches people badly. A sacrifice that saves you 42% or even 62% of UK tax may get little or no recognition on your US return, because US treatment of UK pension contributions depends on the scheme type and on the US/UK treaty. You can end up with full UK relief and no US relief, so US tax falls due on income the UK has sheltered — and because you have paid less UK tax, you also have a smaller foreign tax credit to offset it. Read our guide to [US tax on UK pensions and SIPPs](/resources/blog/us-tax-uk-pensions-sipps) before sacrificing a large amount.

Often the analysis turns on exactly that distinction, because the US treats employer contributions and employee contributions to foreign pension schemes differently, and the treaty articles that can protect them have their own conditions. Since salary sacrifice legally converts an employee contribution into an employer contribution, it can change the US answer as well as the UK one — sometimes helpfully. It is genuinely fact-specific and worth an hour of advice if the sums are large.

It applies the 2026-27 Personal Allowance and its £100,000 taper, the Income Tax bands for England, Wales and Northern Ireland, employee Class 1 National Insurance at 8% and 2%, and employer secondary National Insurance at 15%. It calculates annually rather than per payslip. It excludes student loan repayments, benefits in kind, the tapered annual allowance, Scottish rates, and the April 2029 £2,000 cap, which falls outside the 2026-27 tax year.

The calculation runs entirely in your browser and nothing is stored unless you choose to download the branded PDF report, at which point you provide your name and email so we can send it. Phone and address are optional.

If you are near £100,000, close to the tapered annual allowance, planning a mortgage application, or you have US filing obligations alongside your UK ones, the decision is worth modelling first — sacrifice is a contractual change and cannot usually be unwound mid-year. Book a free 20-minute call with a TaxStone adviser to look at the UK and US positions together.