Pension Salary Sacrifice Calculator 2026/27
See exactly how much you save on tax and National Insurance by making pension contributions through salary sacrifice.
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Results are estimates only and do not constitute financial advice.
Salary sacrifice examples — £35,000 salary, 2026/27
Based on a £35,000 salary, compared from 0% to each contribution level. Click any row to set as your proposed contribution.
| Contribution % | Gross contribution | Tax saving | NI saving | Total saving | Net cost |
|---|
How it's calculated
Salary sacrifice works by reducing your gross salary before any deductions are made. Because both income tax and National Insurance are calculated on the lower figure, you save on both — not just tax.
A basic-rate taxpayer (earning up to £50,270) saves 20p income tax plus 8p NI on every £1 contributed — a total saving of 28p per £1. The net cost of that £1 contribution is just 72p.
A higher-rate taxpayer (earning above £50,270) saves 40p tax plus 2p NI — a total of 42p per £1. For earnings in the £100k–£125,140 range where the personal allowance tapers, the effective saving is even higher.
The net cost shown is the reduction in take-home pay from increasing your contribution. It equals the additional sacrifice minus the combined tax and NI saving.
Frequently asked questions
Salary sacrifice is a formal agreement between you and your employer to reduce your contractual salary in exchange for a non-cash benefit — in this case, a pension contribution. It's different from a personal pension contribution: the money is deducted before it ever reaches your pay packet, so both you and your employer pay less National Insurance.
Yes — most lenders assess affordability based on your post-sacrifice salary (your contractual salary after the reduction). A large sacrifice can reduce your maximum borrowing. Some lenders will accept a letter from your employer confirming the arrangement and restating your notional gross salary, so it's worth asking.
Yes — and they often do. Your employer also saves National Insurance (13.8%) on the sacrificed amount. Many employers pass some or all of that saving back to employees as an additional pension contribution. Ask your HR or payroll team whether your employer has this policy — it can significantly boost your pension pot at no extra cost to you.
Tax rates 2026/27
These are the rates used to calculate your salary sacrifice savings.
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571–£50,270 | 20% |
| Higher rate | £50,271–£125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
| Threshold | Earnings | Rate |
|---|---|---|
| Below PT | Up to £12,570 | 0% |
| Main rate | £12,571–£50,270 | 8% |
| Upper rate | Over £50,270 | 2% |
Scottish income tax rates apply to Scottish taxpayers. Employee NI rates are the same across the UK.
Salary sacrifice reduces your gross salary before tax and National Insurance are calculated, giving you relief on both — unlike a standard pension contribution which only attracts income tax relief. This makes salary sacrifice significantly more tax-efficient.