Salary Sacrifice Pension Calculator
Compare salary sacrifice vs relief at source pension contributions. See tax and NI savings.
Last updated: April 2026 · Source: HMRC
Tax & NI Saving
£1,400.00
£5,000.00 into pension costs you only £3,600.00 in take-home pay
| Before | After | |
|---|---|---|
| Annual Take-Home | £39,519.60 | £35,919.60 |
| Monthly Take-Home | £3,293.30 | £2,993.30 |
| Income Tax Saved | £1,000.00 | |
| NI Saved | £400.00 | |
| Employer NI Saved | £750.00 | |
| Into Pension | £5,000.00 |
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 reduces your gross contractual pay and your employer pays the sacrificed amount directly into your pension. Because the contribution comes from the employer, neither employee National Insurance (8% on earnings £12,570-£50,270) nor employer NI (13.8%) is payable on the sacrificed amount. Under relief at source, you contribute from net pay and only save income tax, not NI — so salary sacrifice is always more efficient when NI applies.
The calculation compares take-home pay under both methods. With relief at source on a £500 monthly contribution from a £40,000 salary, you pay from net pay and reclaim 20% basic rate relief, costing you £400/month. With salary sacrifice, your salary drops by £500 but you save £40 employee NI (8% of £500), so your net pay only drops by £360 — an extra £40/month reaching your pension or pocket.
Your employer also saves 13.8% NI on the sacrificed amount (£69 on £500). Many employers share part or all of this saving by adding it to your pension contribution. Salary sacrifice reduces your qualifying earnings for State Pension, statutory maternity pay, and mortgage affordability assessments, so the calculator flags when sacrifice would take earnings below the NI lower earnings limit (£6,396) or affect benefit entitlements.
Salary sacrifice vs relief at source on £600/month pension contribution
- Gross salary: £45,000/year. Monthly contribution target: £600 gross
- Relief at source: £480 from net pay + £120 tax relief = £600 in pension. Employee NI still paid on £600.
- Salary sacrifice: salary reduced to £37,800. £600 goes to pension. Employee NI saved: £600 x 8% x 12 = £576/year
- Employer NI saved: £600 x 13.8% x 12 = £993.60/year (employer adds 50% to pension = £496.80 extra)
- Total annual benefit of salary sacrifice: £576 NI saving + £496.80 employer share = £1,072.80 more per year
Source: HMRC
Frequently Asked Questions
- What does the Salary Sacrifice Pension Calculator do?
- Compare salary sacrifice vs relief at source pension contributions. See tax and NI savings. All calculations are performed in your browser using official UK rates and thresholds.
- Are these figures guaranteed?
- No. Pension projections are estimates based on assumed growth rates and current contribution levels. Actual returns depend on investment performance, fees and future policy changes.
- What is the pension annual allowance?
- The pension annual allowance for 2025/26 is £60,000. This is the maximum you can contribute (including employer contributions) and receive tax relief. The allowance is tapered for high earners.