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UK Salary Sacrifice Calculator
Salary sacrifice is an arrangement where you give up part of your contractual salary and your employer pays that amount into your pension instead. Because the sacrificed salary is no longer treated as taxable pay, it can reduce Income Tax, employee National Insurance, and student-loan deductions compared with taking the same amount as salary.
This calculator compares a baseline PAYE estimate with a salary-sacrifice pension estimate using the same UK tax-year data as the take-home salary calculator. Enter your gross annual salary, choose a sacrifice amount or percentage, then select the income-tax region and any student loan plan that applies.
The result shows the pension contribution created by the sacrifice, the estimated annual and monthly take-home change, and the payroll savings that explain why the take-home reduction is usually smaller than the amount paid into the pension. It does not add employer National Insurance savings, because employers differ on whether they keep those savings, pass them into the pension, or split them under scheme rules.
- Enter your gross annual salary before any pension salary sacrifice.
- Choose whether the sacrifice is a fixed annual amount or a percentage of salary.
- Select your income-tax region and student-loan plan, then compare the pension contribution with the take-home-pay change.
- Annual take-home change
- -£1,800.00
- Monthly take-home change
- -£150.00
- Pension contribution from sacrifice
- £2,500.00
- Income Tax saving
- £500.00
- National Insurance saving
- £200.00
- Student loan saving
- £0.00
A sacrifice of £2,500.00 (5%) reduces contractual salary to £47,500.00 and is treated here as an employer pension contribution of the same amount.
Estimated payroll savings are £700.00, so each £1.00 sacrificed costs about £0.72 of take-home pay. Employer National Insurance savings are not added because employers vary in whether they pass those savings into your pension.
Methodology and sources
Last reviewed:
The calculator runs two PAYE-style estimates: one with no pension sacrifice and one with the selected sacrifice treated as a salary-sacrifice pension contribution. The difference between the two results is shown as the take-home impact.
Salary sacrifice reduces the taxable pay, National Insurance base, and student-loan repayment base used by the shared UK tax engine. Income Tax bands, Scottish bands, National Insurance thresholds, and student-loan thresholds come from the same GOV.UK-sourced constants used by the salary calculator.
Assumptions
- The estimate covers one employment income stream and assumes the sacrificed amount is permitted by the employer pension scheme.
- Employer National Insurance savings are not added to the pension contribution because employers vary in whether and how they pass those savings on.
- The calculator does not model minimum wage limits, auto-enrolment eligibility, bonus sacrifice timing, employer matching rules, or annual allowance/tapered annual allowance issues.
Sources
Salary-sacrifice results are estimates for comparison only. Check your employer scheme rules, payslip, pension provider, and HMRC guidance before changing pension contributions.
Spot a methodology issue? Send a correction.
Frequently asked questions
Why does my take-home pay fall by less than the pension contribution?
The sacrificed salary is not treated as ordinary taxable pay, so the estimate reduces Income Tax and employee National Insurance, and student-loan repayments when a plan is selected. Those savings offset part of the pension contribution.
Does this include employer National Insurance savings?
No. Some employers keep their National Insurance saving, some add it to your pension, and some share it under scheme rules. This calculator shows the employee-side payroll effect and labels the sacrificed salary as the pension contribution.
Can salary sacrifice reduce pay below minimum wage?
Employers must operate salary sacrifice within legal and scheme limits. This calculator does not test minimum wage, auto-enrolment, or annual allowance constraints, so use employer scheme rules for eligibility decisions.
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