Salary Sacrifice Calculator UK — See Your Tax and NI Savings
Calculate how much you save in tax and National Insurance by using salary sacrifice for pension contributions electric car lease cycle to work and childcare in 2026.
Salary sacrifice is an arrangement where you agree to reduce your gross salary in exchange for a non-cash benefit. Because the benefit comes before tax and National Insurance you save both income tax and NI on the sacrificed amount. For pension contributions this can boost your pension pot by 12-14% compared to net pay contributions at no extra cost to you. Salary sacrifice also reduces your employer NI and many employers pass some or all of this saving to you through higher pension contributions.
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Key Information
| Parameter | Details |
|---|---|
| Tax Saved (Basic Rate) | 20% of sacrificed amount |
| NI Saved (Employee) | 8% of sacrificed amount |
| Total Saving (Basic Rate) | 28% of sacrificed amount |
| Total Saving (Higher Rate) | 42% of sacrificed amount |
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Use Calculator NowFrequently Asked Questions
How does salary sacrifice work for pensions?
Instead of receiving salary and then contributing to your pension after tax you agree to reduce your salary by the pension contribution amount. Your employer pays the full amount directly into your pension from your pre-tax salary. On a £500 monthly pension contribution a basic rate taxpayer saves £100 in tax and £40 in NI compared to net pay arrangement. That same £500 contribution only reduces take-home pay by £360 instead of £500.
Does salary sacrifice affect my mortgage application?
Yes salary sacrifice reduces your gross salary on paper which can affect mortgage affordability calculations. Some lenders will add back pension salary sacrifice contributions when assessing income while others use the lower contractual salary. Before a major mortgage application consider whether to temporarily opt out of salary sacrifice if allowed. Discuss this with your mortgage broker who can recommend lenders that account for salary sacrifice correctly.
Can salary sacrifice take me below minimum wage?
Your salary after sacrifice cannot fall below the National Living Wage currently £11.44 per hour for workers aged 21 and over. This limits how much lower-paid employees can sacrifice. Additionally student loan repayments and tax credits are based on your actual lower salary after sacrifice which can be beneficial for student loan repayment but may reduce tax credit entitlements.
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Last updated: 24 March 2026