Salary Sacrifice Calculator
See how much you save on tax and National Insurance through salary sacrifice for the 2025/26 tax year.
Your Details
Your annual salary before any deductions
Annual equivalent: £3,600.00
The type of benefit you are sacrificing salary for
Scotland has different income tax bands
Your Annual Tax Saving
£1,008.00
You save £720.00 in income tax and £288.00 in National Insurance
Monthly Sacrifice
£300.00
£3,600.00 per year
Real Monthly Cost
£216.00
After tax and NI savings
Employer NI Saving
£540.00
Your employer saves too
Side-by-Side Comparison
| Without Sacrifice | With Sacrifice | |
|---|---|---|
| Gross Pay | £45,000.00 | £41,400.00 |
| Income Tax | £6,486.00 | £5,766.00 |
| Employee NI | £2,594.40 | £2,306.40 |
| Net Pay | £35,919.60 | £33,327.60 |
Total Going to Your Pension
£3,600.00/year
That's £300.00 per month into your pension pot
Salary sacrifice is one of the most tax-efficient ways to boost your pension. Your £300.00 monthly sacrifice only costs you £216.00 in take-home pay. The remaining £84.00 is covered by tax and NI savings.
This calculator is for informational purposes only and does not constitute financial advice. Tax calculations are based on current HMRC rates and may not reflect your exact circumstances. Always consult a qualified financial adviser.
How does salary sacrifice work in the UK?
Salary sacrifice is an arrangement between you and your employer where you agree to give up part of your gross salary in exchange for a non-cash benefit, most commonly an enhanced pension contribution. Because the sacrifice is made before tax and National Insurance are calculated, both you and your employer pay less in contributions. For the 2025/26 tax year, employees pay 8% NI on earnings between £12,570.00 and £50,270.00, meaning a basic-rate taxpayer saves 20% income tax plus 8% NI on every pound sacrificed -- a 28% saving. Higher-rate taxpayers save even more at 40% plus 2% NI.
Employers also benefit because they no longer pay 15% employer NI on the sacrificed amount. Many employers pass some or all of this saving into the employee's pension, further boosting the value of the arrangement. Beyond pensions, salary sacrifice is available for childcare vouchers (for those with existing entitlements), the Cycle to Work scheme, and ultra-low emission company cars. It is important to note that salary sacrifice reduces your official gross salary, which could affect mortgage applications, statutory pay entitlements, and some state benefits. Always check with your employer or a financial adviser before entering into a salary sacrifice arrangement.
Featured Partner
Boost your pension with a SIPP
If your employer doesn't offer salary sacrifice, a Self-Invested Personal Pension (SIPP) still gives you tax relief at your marginal rate. Compare the best SIPP providers and start building your retirement pot today.
Compare SIPPsCapital at risk. Pension rules apply. Tax treatment depends on individual circumstances and may change in the future.