See how much tax and National Insurance a pension salary sacrifice saves you in 2026/27.
| Per year | Without | With |
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2026/27 rates: personal allowance £12,570, employee NI 8% from £12,570 to £50,270 and 2% above, employer NI 15% above £5,000. Assumes a standard tax code and category A NI, worked out over a full year. Salary sacrifice must not take your cash pay below the National Minimum Wage.
Salary sacrifice is one of the most tax efficient ways to save into a workplace pension. This salary sacrifice pension calculator shows how much Income Tax and National Insurance you save in 2026/27, how your take home pay changes and, under the HMRC salary sacrifice rules, what your employer saves in NI as well.
Quick answer: A salary sacrifice pension calculator shows the Income Tax and NI you save by swapping salary for pension. On a £40,000 salary, sacrificing 5% (£2,000) saves £400 of Income Tax and £160 of NI, so take home pay falls by only £1,440 while your employer saves £300 in NI.
In This Guide
What Is Salary Sacrifice for Pensions?
With salary sacrifice you agree to give up part of your salary and your employer pays the same amount into your pension instead. Because your cash salary is lower, you pay less Income Tax and less employee National Insurance. A normal pension contribution through net pay only saves tax, so the NI saving is what makes salary sacrifice better value for most employees.
The saving is tax and NI on salary minus tax and NI on (salary minus sacrifice). On a £40,000 salary, sacrificing 5% (£2,000) saves £400 of Income Tax at 20% and £160 of NI at 8%, a total of £560. Your take home pay falls by only £1,440 while £2,000 goes into your pension. Your employer saves 15% NI on the same £2,000, which is £300.
How Do You Use the Salary Sacrifice Pension Calculator?
Step 1: Enter Your Salary
Type your gross yearly salary before any sacrifice, and if your contract quotes an hourly rate, convert it to an annual figure first so the number you enter is accurate. Type your gross yearly salary before any sacrifice. If your contract quotes an hourly rate, the hourly to annual salary calculator converts it first so the figure here is accurate.
Step 2: Enter the Sacrifice
Choose a percentage of salary or a fixed amount per year. Switching between the two converts your figure, so you can see what 5% means in pounds.
Step 3: Choose Region and Employer Options
Pick Scotland if you pay Scottish Income Tax, because the bands and rates differ. Tick the employer options to see the 15% employer NI saving, or to add it to your pension if your employer shares it.
Step 4: Read Your Results
You will see tax and NI saved, the real cost to your take home pay and a side by side table. To see how those extra contributions could grow, the compound interest calculator projects a regular monthly payment over the years until you retire.
How Much Can Salary Sacrifice Save in 2026/27?
| Salary | Sacrifice (5%) | Tax saved | NI saved | Total saved |
|---|---|---|---|---|
| £25,000 | £1,250 | £250 | £100 | £350 |
| £40,000 | £2,000 | £400 | £160 | £560 |
| £60,000 | £3,000 | £1,200 | £60 | £1,260 |
| £80,000 | £4,000 | £1,600 | £80 | £1,680 |
Sacrificing 5% of a £40,000 salary into a pension saves £400 in tax and £160 in NI, a total of £560, using England, Wales and Northern Ireland rates. Examples use England, Wales and Northern Ireland rates. A lower cash salary can affect mortgage applications, life cover linked to salary and some statutory payments. From 6 April 2029, the government's salary sacrifice reform will charge employee and employer NI on sacrifices above £2,000 a year, although Income Tax relief stays the same.
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How we checked this tool: the Tools Veria Editorial Team built this tool by hand, checked it against the official rules or published standards where they apply, and tested it against worked examples. Results are estimates for planning, not personal financial or tax advice. Read our editorial policy and disclaimer, or report an error.
Frequently Asked Questions
How much does salary sacrifice save?
You save Income Tax at your marginal rate plus employee NI at 8% or 2%. A basic rate taxpayer saves 28p for every £1 sacrificed below £50,270.
Is salary sacrifice better than a normal pension contribution?
Usually yes, because you save National Insurance as well as tax. A normal contribution only gets Income Tax relief.
Does my employer save money with salary sacrifice?
Yes. Your employer saves 15% National Insurance on the amount you sacrifice, and some employers add part or all of it to your pension.
Is salary sacrifice changing?
From 6 April 2029, NI will be charged on pension salary sacrifice above £2,000 a year. Income Tax relief is not affected.
Can salary sacrifice take me below minimum wage?
No. HMRC rules say a salary sacrifice arrangement must not reduce your cash earnings below the National Minimum Wage.
Does salary sacrifice reduce student loan repayments?
Yes. Student loan repayments are based on your cash pay, so a lower salary after sacrifice also means smaller repayments.