Salary sacrifice calculator

Enter your salary and the amount you give up for your pension. The calculator shows how much your take-home pay falls in the 2026/27 tax year, how much goes into your pension, and the income tax, National Insurance and student loan you no longer pay.

Your take-home pay would fall by

£1,440.00 a year

and £2,000.00 would go into your pension

Your details

Salary before tax Per year, in pounds

Where you pay income tax England Wales Northern Ireland Scotland

Sacrifice as Percent of salary Amount a year

Sacrifice Percent of salary %

Employer passes on its National Insurance saving Ask your employer; many pass on none £

Student loan None Plan 1 Plan 2 Plan 4 (Scotland) Plan 5 Postgraduate loan as well

CalculateReset

Before and after

	Before	After
Take-home a year	£32,321.40	£30,881.40
Take-home a month	£2,693.45	£2,573.45
Income tax	£5,484.20	£5,084.20
National Insurance	£2,194.40	£2,034.40
Student loan	£0.00	£0.00
Into your pension	£0.00	£2,000.00

For every £1 you give up, your take-home falls by £0.72.

How this was worked out

1. Salary before tax: £40,000.00
2. £40,000.00 × 5% = £2,000.00
3. £40,000.00 − £2,000.00 = £38,000.00
4. Income tax saved: £400.00
5. National Insurance saved: £160.00
6. Employer National Insurance saving: £300.00
7. Employer amount added to the pension: £0.00

What salary sacrifice is

Salary sacrifice is an agreement with your employer to take a lower salary. In return, your employer pays the amount you give up into your pension. Your contract changes to show the new, lower pay, so tax and deductions are worked out on that lower figure.

The same kind of agreement is used for other benefits, such as cycle to work schemes and electric cars. This calculator covers pension contributions only.

What it saves

Because the sacrificed pay is never paid to you, three deductions fall. You pay no income tax on it, no employee National Insurance and, if you have a student loan, no repayment on it. The amount that reaches your pension stays the full sum you gave up.

How much you save depends on where your pay sits. Each pound given up saves you:

• income tax at 20% at the basic rate, 40% at the higher rate or 45% at the additional rate, in England, Wales and Northern Ireland. Scotland has its own rates.
• National Insurance at 8% on pay between £12,570 and £50,270, and at 2% on pay above £50,270.
• a student loan repayment of 9% if your pay is above your plan's threshold, or 6% for a postgraduate loan.

So a basic-rate taxpayer saves less income tax and more National Insurance than a higher-rate taxpayer. If your income is over £100,000, you lose £1 of personal allowance for every £2 above it. A sacrifice that brings your pay down towards that figure gives back some of the allowance, so the tax saved on each pound is larger than the band rate. If the sacrifice takes your pay below a threshold, the saving on the part below it is smaller.

The line under the table shows how much your take-home falls for each £1 you give up. If you paid tax, National Insurance or a loan repayment on that pay, the figure is less than £1, because those savings make up the rest.

Your employer's National Insurance saving

Your employer pays National Insurance of 15% on your pay above £5,000 a year. A lower salary lowers that bill too. Some employers add part or all of that saving to your pension. Many keep it. Your employer or your pension scheme can tell you which applies. Enter the percentage passed on, and the calculator adds that share to the amount going into your pension. It does not change your take-home pay.

Effects to be aware of

A lower salary can change anything that is based on your pay. A mortgage lender may look at your salary after the sacrifice. Statutory maternity, paternity and sick pay depend on your average earnings, and a sacrifice can reduce them or, if your earnings fall below the lower earnings limit, stop them. Some state benefits based on your earnings or your National Insurance record can also change. Your employer decides whether pay rises, overtime and pension contributions are based on the old salary or the new one.

A sacrifice cannot take your cash pay below the National Minimum Wage. The calculator does not check this. GOV.UK sets out the rules in its guidance on salary sacrifice.

What the calculator assumes

• The 2026/27 tax year, 6 April 2026 to 5 April 2027.
• You have the standard tax code for the year and no other income.
• You pay the standard rate of employee National Insurance (category A).
• The whole sacrifice goes into your pension, and you pay no other pension contribution.
• The figures after the sacrifice are the same as the take-home pay calculator gives for your salary less the amount you give up.
• The sums are worked out for the whole year at once, so a monthly payslip can be a few pence different.

Every rate on this page comes from GOV.UK. The sources page lists each one with the date we checked it, and the methodology page explains the rounding. If you work through your own limited company, the IR35 calculator compares the ways a contractor can be paid.

Spotted a mistake?

Email [email protected]. Tell us what you entered and what you expected to see. Fixed errors are listed on the corrections page.