Salary Sacrifice Calculator
✓ Verified for 2026/27Sacrifice Scheme Details
A salary sacrifice arrangement reduces your gross salary in exchange for non-cash benefits (e.g. pension contributions, cycle-to-work schemes, low-emission company cars), reducing the amount of Tax and NI you pay.
Sacrifice Savings Breakdown
Before Sacrifice
After Sacrifice
How We Calculated This
- Enter Pension Sacrifice details: Specify salary sacrifice contribution percentage or flat rate.
- Calculate pre-tax deduction: Reduce the gross taxable salary by the contribution amount.
- Compute new lower taxes: Recalculate Income Tax and employee National Insurance on the lower taxable figure.
- Determine Savings: Compare the net pay before and after the contribution to find the true net cost and tax/NI savings.
Real-World Examples
Shows how the tax/NI savings reduce the true cost of saving for retirement.
Gross salary: £40,000 Pension contribution (5%): £2,000 New taxable salary: £38,000 Income Tax savings (20% of £2,000): £400 National Insurance savings (8% of £2,000): £160 Total Tax + NI saved: £560 Net cost to employee: £2,000 - £560 = £1,440
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Frequently Asked Questions
What is salary sacrifice and how does it work?
Salary sacrifice is an agreement where you give up a portion of your cash salary in exchange for non-cash benefits provided by your employer (most commonly pension contributions, cycle-to-work schemes, or electric car leases). Because your gross salary is lower, you pay less Income Tax and National Insurance.
How much tax and NI do I save with salary sacrifice?
A basic rate taxpayer saves 20% income tax and 8% National Insurance (total 28% savings) on the sacrificed amount. A higher rate taxpayer saves 40% tax and 2% NI (total 42% savings). Your employer also saves 15% on employer NI contributions, which they often pass back into your pension pot.