UK tax · Pensions
UK salary sacrifice calculator.
See what a pension salary sacrifice really costs your pay packet, today and after the April 2029 NI cap.
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How much does salary sacrifice save?
With pension salary sacrifice you give up part of your gross salary and your employer pays it into your pension instead. Because your pay is lower you pay less Income Tax and, until April 2029, less employee National Insurance (8% between £12,570 and £50,270, 2% above), and your employer saves 15% National Insurance above the £5,000 secondary threshold (GOV.UK). From April 2029 the NI exemption on employee salary sacrifice contributions is capped at £2,000 a year; Income Tax relief is unaffected and employer contributions stay NI free.
Worked example. On a £50,000 salary, sacrificing £5,000 saves £1,000 of Income Tax and £400 of NI, so the £5,000 reaches the pension for about £3,600 of take-home pay. With the 2029 cap only the first £2,000 saves NI (£160), so the cost rises to £3,840.
Salary sacrifice can reduce statutory pay, mortgage affordability and some benefits, and your pay cannot fall below National Minimum Wage rates.
Frequently asked questions
How much tax does salary sacrifice save?
You save Income Tax at your marginal rate on the amount sacrificed, plus employee NI at 8% (2% above £50,270) until April 2029.
What changes in April 2029?
The NI exemption on employee pension salary sacrifice is capped at £2,000 a year. Income Tax relief and employer contributions are unaffected.
Does my employer save money too?
Yes, 15% employer NI on the sacrificed pay. Some employers pass part of it back into your pension; enter the share to include it.
Is there a downside?
Lower contractual pay can reduce statutory pay, some benefits and mortgage affordability, and pay cannot fall below National Minimum Wage rates.
Sources
Checked
- GOV.UK: Salary sacrifice and the effects on PAYE
- GOV.UK: Changes to salary sacrifice for pensions from April 2029
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Income Tax rates and Personal Allowances
Figures are for the 2026-27 tax year. Runs entirely in your browser. Nothing you type is sent or stored.
Scope
A planning estimate using standard rates, not tax advice or an HMRC calculation. Your own position may differ. Check GOV.UK, your HMRC account or a qualified adviser before acting.