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Pensions
Salary sacrifice
Compare take-home pay before and after a pension salary sacrifice, including tax, NI and loan deductions.
Open calculatorEngland / 2026/27
Salary sacrifice calculator
Calculations run in your browser.
Reduction in take-home / year
| Pension contribution / year | £5,000.00 |
|---|---|
| Income Tax saving / year | £2,000.00 |
| NI saving / year | £100.00 |
| Loan repayment reduction / year | £0.00 |
| Take-home before / month | £3,779.78 |
| Take-home after / month | £3,538.12 |
Compared with no pension contribution. Reduced loan repayments are a cash-flow change, not necessarily a lifetime saving. Separate employer contributions and any shared employer NI saving are excluded. Minimum-wage check is annual and indicative; your employer must check each pay period.
Check the inputs to calculate a result.
Calculation details
What changes
Pension salary sacrifice exchanges cash salary for an employer pension contribution. The lower cash salary reduces taxable pay and NI earnings. It can also reduce student and postgraduate loan deductions. This comparison starts with no pension contribution; it does not compare an existing net-pay or relief-at-source scheme.
Minimum wage and employer contributions
Salary sacrifice must not take pay below the applicable minimum wage. This tool assumes non-apprentice age 21+ and checks regular annual salary against £12.71 × weekly paid hours × 52. An employer must still check each pay period. Separate employer contributions and shared employer NI savings are excluded.
Example
With a £60,000 salary, a £5,000 sacrifice and no loans, estimated Income Tax falls by £2,000 and employee NI by £100. The pension receives £5,000 while annual take-home falls by £2,900.
Assumptions
England, 2026/27. One job for a full tax year, standard Personal Allowance with income taper and ordinary employee NI below State Pension age. Excludes other income, benefits in kind, special tax codes and directors. Monthly figures are annual estimates divided by 12, not payslip predictions. Defined-contribution pensions only. This does not check your annual allowance, tapered allowance, money purchase annual allowance or carry-forward. Employer contributions also use your allowance. Contributions cannot exceed salary or £60,000 in this tool. Reduced earnings may affect statutory pay, benefits and borrowing assessments.
Sources
- Net pay and relief-at-source treatment, 20% provider relief and additional relief limited to higher-taxed income
- Pension salary sacrifice reduces cash pay and NI earnings; minimum-wage restriction
- Gross relief-at-source contributions reduce adjusted net income
- Standard annual allowance includes employer contributions; taper/MPAA may apply
- Section 10(6): relief-at-source extension of basic and higher-rate limits under Finance Act 2004 s192(4)
- Age 21+ National Living Wage £12.71 per hour from April 2026
- Personal Allowance and adjusted-net-income taper
- Category A rates and annual NI thresholds
- NI normally deducted per pay period
- Separate employment NI liabilities and aggregation exceptions
- Plan thresholds, rates and simultaneous undergraduate/postgraduate deductions
- Loan earnings follow Class 1 NI earnings; pension net pay does not lower loan earnings
- Multiple employers and Self Assessment loan aggregation
- Voluntary repayments may not help before write-off and are not refundable
Checked 2026-10-25. Estimate only, not financial advice.