Salary sacrifice pension calculator
Compare salary sacrifice with net pay and relief at source for the same pension contribution: your take-home, what reaches your pension and the NI you save.
- Extra take-home with salary sacrifice
- £160
- a year more than relief at source, for the same £2,000 into your pension
Salary sacrifice
- Take-home a year
- £30,880
- Into pension
- £2,000
- Cost to you
- £1,440
- Tax relief
- £400
- NI saved
- £160
- Student loan saved
- £0
Net pay
- Take-home a year
- £30,720
- Into pension
- £2,000
- Cost to you
- £1,600
- Tax relief
- £400
- NI saved
- £0
- Student loan saved
- £0
Relief at source
- Take-home a year
- £30,720
- Into pension
- £2,000
- Cost to you
- £1,600
- Tax relief
- £400
- NI saved
- £0
- Student loan saved
- £0
Your employer saves £300 a year in National Insurance. Some employers add part or all of that to your pension.
From 6 April 2029, only the first £2,000 a year of salary sacrifice into a pension will be free of National Insurance. Your £2,000 is within that.
Uses the 2026 to 2027 rules for income tax, employee National Insurance (8% and 2%), employer National Insurance (15%) and student loans, worked out month by month. The same amount reaches your pension each way: sacrificed pay, a net pay deduction, or a relief at source payment of 80% with 20% added by the provider. Higher rate relief on relief at source is shown as if you’ve claimed it. Cost to you is how much your take-home falls against paying nothing in. Salary sacrifice lowers your pay, which can reduce statutory pay such as maternity pay and some earnings-related benefits, and it can’t take your pay below the minimum wage. If your income is under the personal allowance, net pay gives no tax relief through your pay. From 2024 to 2025 onwards you can claim a top-up for that after the tax year: HMRC writes to people it thinks qualify to confirm their bank details, so it isn’t paid automatically.
Three ways to pay into a workplace pension
With salary sacrifice you give up part of your salary and your employer pays it into your pension, so you pay no income tax or National Insurance on it. A net pay arrangement takes your contribution before income tax but not before National Insurance. With relief at source it comes out of your pay after tax: you pay 80%, your pension provider claims the other 20% from HMRC, and higher rate taxpayers claim the rest through a tax return or their tax code.
What the comparison shows
The calculator puts the same amount into your pension each way and shows what’s left in your pay. Income tax relief usually comes out the same, so the difference is National Insurance, plus student loan repayments if you have one. On a £40,000 salary, sacrificing £2,000 (5%) leaves you £160 a year better off than relief at source or net pay, because you don’t pay 8% NI on it. Above £50,270 a year the NI saving is 2%.
Your employer saves 15% National Insurance on what you sacrifice, £300 in that example. Some employers add part or all of it to your pension, so put the share in to see the difference.
The £2,000 cap from April 2029
The National Insurance Contributions (Employer Pensions Contributions) Act 2026 became law on 29 April 2026. From 6 April 2029, only the first £2,000 a year you sacrifice into a pension will be free of National Insurance, for you and your employer. Income tax relief doesn’t change. The calculator uses the 2026 to 2027 rules, so the cap isn’t applied, but it shows what it would cost at today’s rates.
Sources
- Salary sacrifice for employers, HMRC
- Tax on your private pension contributions, GOV.UK
- Rates and thresholds for employers 2026 to 2027, HMRC
- Changes to salary sacrifice for pensions from April 2029, HM Treasury
- National Insurance Contributions (Employer Pensions Contributions) Act 2026, legislation.gov.uk
- Relief relating to net pay arrangements, HMRC