Salary sacrifice pension calculator
Swap part of your salary for an employer pension contribution and you save both income tax and National Insurance. See how little each £1 into your pension really costs.
Cost of putting £1,000 into your pension
| Salary | Drop in take-home | Saving |
|---|---|---|
| £30,000 | £720.00 | 28.0% |
| £45,000 | £720.00 | 28.0% |
| £60,000 | £580.00 | 42.0% |
| £80,000 | £580.00 | 42.0% |
| £110,000 | £380.00 | 62.0% |
A basic-rate taxpayer saves 20% income tax plus 8% National Insurance, so £1,000 into the pension costs about £720 of take-home pay. Higher-rate taxpayers save 40% plus 2%. Between £100,000 and £125,140 the saving reaches 62%, because sacrifice also wins back Personal Allowance.
Things to check before you sacrifice
- Your cash pay must stay at or above the National Minimum Wage (£12.71 an hour for those 21 and over).
- A lower salary can reduce mortgage affordability, life cover linked to salary, and statutory pay such as maternity pay.
- From April 2029 the government plans to charge National Insurance on salary-sacrificed pension contributions above £2,000 a year; income tax relief is unchanged.
FAQ
Is salary sacrifice better than relief at source?
For most employees yes, because it saves National Insurance as well as income tax. Relief at source gives the same income tax relief but no NI saving.
Does my employer save money too?
Yes, 15% employer National Insurance on the sacrificed amount. Some employers pass this on into your pension.
Can salary sacrifice take me out of the £100k trap?
Yes. Sacrificing enough to bring adjusted net income down to £100,000 restores your full Personal Allowance.