Salary Sacrifice Calculator
See how much you could save on tax and NI by sacrificing part of your salary for pension, childcare or cycle to work.
Last updated: April 2026 · Source: HMRC — Salary sacrifice guidance
Total Tax & NI Saved
£1,400.00
Net cost to you: £3,600.00 (72% of sacrifice)
| Before Sacrifice | After Sacrifice | Saving | |
|---|---|---|---|
| Gross Salary | £40,000.00 | £35,000.00 | |
| Income Tax | £5,486.00 | £4,486.00 | £1,000.00 |
| National Insurance | £2,194.40 | £1,794.40 | £400.00 |
| Take-Home Pay | £32,319.60 | £28,719.60 |
By sacrificing £5,000.00, your take-home pay drops by only £3,600.00 — a saving of £1,400.00 in tax and NI.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Salary sacrifice is an arrangement where you contractually reduce your gross salary in exchange for a non-cash benefit, most commonly increased pension contributions. Because your taxable salary is lower, you pay less income tax and National Insurance.
For a basic-rate taxpayer sacrificing £100: you save £20 income tax + £8 NI = £28, so the pension contribution effectively costs you only £72. Higher-rate taxpayers save even more — £40 tax + £8 NI = £48 saved per £100 sacrificed.
Your employer also saves 15% employer NI on the sacrificed amount. Some employers pass part of this saving back to you as additional pension contributions. The calculator shows savings for both employee and employer.
Example: £45,000 salary, sacrifice £5,000 to pension
- Income tax saved: £5,000 × 20% = £1,000
- Employee NI saved: £5,000 × 8% = £400
- Total employee saving: £1,400
- Employer NI saved: £5,000 × 15% = £750
- Net cost to you: £3,600 for £5,000 pension contribution
Source: HMRC — Salary sacrifice guidance
Frequently Asked Questions
- What is salary sacrifice?
- Salary sacrifice is an arrangement where you give up part of your gross salary in exchange for a non-cash benefit, such as increased pension contributions, childcare vouchers, or a cycle-to-work scheme. You pay less income tax and NI because your taxable salary is lower.
- Can salary sacrifice reduce my tax bill?
- Yes. Because salary sacrifice reduces your gross pay before tax is calculated, you save on both income tax and National Insurance. Your employer also saves on employer NI contributions, and some employers pass this saving back to you.