Salary Sacrifice Calculator
Compare pension salary sacrifice vs other typesRuns in your browser
| Per year | Salary sacrifice | Net pay arrangement | Relief at source |
|---|---|---|---|
| Into pension | £2,250.00 | £2,250.00 | £2,250.00 |
| Income tax | £6,036.00 | £6,036.00 | £6,486.00 |
| National Insurance | £2,414.40 | £2,594.40 | £2,594.40 |
| Student loans | £0.00 | £0.00 | £0.00 |
| Take-home pay | £34,299.60 | £34,119.60 | £34,119.60 |
| Real cost to you | £1,620.00 | £1,800.00 | £1,800.00 |
Relief at source assumes only the 20% basic-rate top-up; higher and additional-rate taxpayers (and Scottish intermediate-rate and above) can claim the extra relief through Self Assessment, which narrows the gap. Employer NI savings that some employers pass on under salary sacrifice are not included.
These are estimates based on 2026/27 rates and the inputs you give. Your actual position can differ (other income, benefits in kind, tax code changes, scheme rules). This is not financial or tax advice.
How it works
Worked example
Input: £45,000 in England, 5% pension (£2,250 a year), no student loan.
- No pension: take-home £35,919.60.
- Relief at source or net pay: take-home £34,119.60, so the £2,250 costs you £1,800.
- Salary sacrifice: take-home £34,299.60, so it costs you £1,620 (NI saved: £180).
Result: Salary sacrifice saves £180 a year on the same £2,250 pension contribution.
Limits
- Assumes one PAYE job for the whole 2026/27 tax year. Pay-period rounding on real payslips can change monthly figures by a few pence.
- Does not include benefits in kind, the High Income Child Benefit Charge, Marriage Allowance or Blind Person's Allowance unless they are reflected in the tax code you enter.
- Employer pension contributions and employer National Insurance are not part of take-home pay and are not shown.
- Relief at source shows only the 20% basic-rate top-up. Higher-rate relief claimed through Self Assessment is not included.
Sources
- HMRC – Rates and thresholds for employers 2026 to 2027
- GOV.UK – Income Tax rates and Personal Allowances
- GOV.UK – Scottish Income Tax
- GOV.UK – National Insurance rates and categories
- GOV.UK – Repaying your student loan: what you pay
- GOV.UK – Tax on your private pension contributions (tax relief)
- GOV.UK – Workplace pensions: what you, your employer and the government pay
- GOV.UK – Tax codes
How to use
- 1Enter your salary and the percentage you want to pay into your pension.
- 2Set your region and student loan.
- 3Compare take-home pay and the real cost of the same pension contribution under each method.
FAQ
Why is salary sacrifice cheaper?
Your salary is reduced before tax and National Insurance, so you save NI (8% or 2%) as well as income tax. With a net pay arrangement or relief at source you only get income tax relief.
Are there downsides to salary sacrifice?
A lower contractual salary can reduce some salary-linked benefits (such as life cover or mortgage applications based on salary), and it cannot take your pay below the National Minimum Wage. Budget 2025 also announced a £2,000 annual cap on NI-free pension salary sacrifice from April 2029.
Does salary sacrifice reduce my student loan repayments?
Yes. Repayments are worked out on pay after salary sacrifice, so sacrificed pay is also free of the 9% student loan deduction.