Pension Salary Sacrifice Calculator — Sacrifice, Net Pay & Relief at Source Compared
Compare the same pension contribution under salary sacrifice, net pay and relief at source: take-home pay, tax and National Insurance saved (yours and your employer's), and the effect on the £100,000 and £60,000-£80,000 income thresholds.
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The same £1 of pension contribution saves a different amount of tax and National Insurance depending on HOW it’s paid in. This calculator takes one contribution target — the amount you want landing in the pension before any relief — and runs it through all three UK mechanisms side by side: salary sacrifice, a net-pay workplace scheme, and a relief-at-source personal pension or SIPP. It shows take-home pay, tax and National Insurance saved (yours AND your employer’s), the effect on adjusted net income for the £100,000 personal allowance taper and the £60,000–£80,000 Child Benefit charge, an Annual Allowance check, and a minimum-wage floor check for salary sacrifice.
The three ways a pension contribution can leave your pay
Salary sacrifice. You contractually agree to a lower salary; your employer pays the sacrificed amount into your pension as an employer contribution, on top of its own. Because your salary is lower, you pay less Income Tax AND less National Insurance — and so does your employer, on its own share.
Net pay. Your contribution is deducted from gross pay before Income Tax is worked out, so you get full tax relief immediately, at your marginal rate. But National Insurance is calculated on your pay before that deduction — HMRC’s own manual is explicit: “NICs must be assessed on the gross earnings before deduction of any pension contributions” and “there is no equivalent NICs relief.” You get the tax saving, not an NI saving.
Relief at source. You pay a net amount from take-home pay; your provider automatically claims 20% basic-rate relief from HMRC and adds it — £80 becomes £100 in the pot for everyone, even a non-taxpayer or a Scottish 19% starter-rate payer, with no clawback. Above the basic rate, you claim the rest yourself via Self Assessment; it never lands in the pension automatically.
Why salary sacrifice usually wins on National Insurance
On a £45,000 salary with a 5% (£2,250) contribution by salary sacrifice, the salary used for tax and National Insurance drops to £42,750. That saves £450 of Income Tax (the same saving net pay gives), plus £180 of YOUR National Insurance and £338 of your EMPLOYER’S — a saving net pay and relief at source never touch, because neither changes what your National Insurance is worked out on.
The employer-NI-sharing option
Your employer’s National Insurance saving belongs to your employer, not automatically to you. MoneyHelper is direct: employers “can choose to add this saving to your pension as well” — but don’t have to. Ask HR what percentage, if any, your scheme passes back, then enter it above.
Two limits worth checking
Salary sacrifice cannot legally take cash pay below the National Minimum/Living Wage for your age — £12.71 an hour for anyone 21 or over from April 2026; this tool estimates an annual floor for a standard 37.5-hour week. Separately, total contributions from every source — yours, your employer’s, any NI-share — count against the £60,000 Annual Allowance (lower above £260,000 adjusted income, down to a £10,000 minimum); go over it without carry-forward and the excess can trigger a tax charge.
The effect on your adjusted net income
All three methods cut adjusted net income by the SAME amount — the gross contribution — once relief-at-source is grossed up correctly. That decides whether the £12,570 personal allowance starts tapering above £100,000 (gone at £125,140), and whether the High Income Child Benefit Charge claws back Child Benefit between £60,000 and £80,000. If you claim it, get the exact charge from the Child Benefit tax calculator; this page just flags the zone.
A change coming in April 2029
Following the Autumn 2025 Budget, from 6 April 2029 salary-sacrificed contributions above £2,000 a year will stop being exempt from National Insurance on the excess — yours and your employer’s. Not yet in force, and not applied to the 2026/27 figures above.
Where this fits with the rest of your tax
This page compares HOW a contribution is paid in, not your whole tax picture. Salary alone: take-home pay calculator. Salary, rent, dividends and pension together: income tax calculator. Every National Insurance class, including what stops at State Pension age: National Insurance calculator. The exact Child Benefit charge: Child Benefit tax calculator.
Employer Class 1 National Insurance: gov.uk, “Rates and thresholds for employers 2026 to 2027”. Net pay and National Insurance: HMRC National Insurance Manual NIM02365. Salary sacrifice, NI-sharing and the April 2029 change: MoneyHelper, “Boost your pension with salary sacrifice”, and LITRG, “Pension tax relief: salary sacrifice” (updated 6 April 2026). Minimum wage: gov.uk, “Salary sacrifice for employers” and “National Minimum Wage and National Living Wage rates”. Relief-at-source rates including the Scottish 19% no-clawback rule, and the Annual Allowance and its taper: gov.uk, “Tax on your private pension contributions” and “Work out your reduced (tapered) annual allowance”. Auto-enrolment qualifying earnings band: gov.uk, “Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27”. All read 13 September 2026. Income tax bands and the personal allowance taper: this site’s own taxdata.py, verified against gov.uk 29 August 2026. General information, not advice — particularly the Annual Allowance taper and carry-forward, which depend on your full financial position.
Asked constantly
Salary sacrifice reduces your contractual salary, so you save Income Tax AND National Insurance (yours and your employer's). Net pay is deducted before tax is worked out, so you get full Income Tax relief automatically, but National Insurance is still worked out on your pay before the deduction — HMRC's own manual says there is "no equivalent NICs relief." Relief at source is paid from your take-home pay; your provider claims 20% back from HMRC automatically, and you claim any extra yourself if you pay tax above the basic rate.
For most people earning above the Class 1 Primary Threshold, yes — it's the only one of the three that reduces the salary your National Insurance is worked out on. But it isn't automatically the best choice for everyone: see the low-earner example below.
Yes — low earners already below the National Insurance threshold are the clearest case. The Low Incomes Tax Reform Group gives a worked example: someone earning £975 a month pays no tax and no employee National Insurance either way, so sacrificing £100 a month costs the full £100. Paying the same amount into a relief-at-source scheme instead only costs £80, because the pension provider still adds the £20 top-up automatically — salary sacrifice has nothing to save them, and it loses that "free" 20%.
No. gov.uk is explicit: "A salary sacrifice arrangement must not reduce an employee's cash earnings below the National Minimum Wage (NMW) rates." This calculator estimates the floor for a standard 37.5-hour week; check your actual hourly rate if your hours differ, especially if a minimum wage rise is due.
When you sacrifice salary, your employer also pays less National Insurance on the lower amount. Some employers add some or all of that saving into your pension on top of their normal contribution; many don't. There's no way to tell from your payslip alone — ask HR or check your scheme's literature, then enter the percentage they confirm.
All three methods reduce your adjusted net income by the same amount for the same gross contribution target, so a big enough contribution can pull you back under £100,000 (restoring personal allowance) or under £60,000/£80,000 (reducing or clearing the Child Benefit charge). This page flags which zone you're in; the Child Benefit tax calculator works out the exact charge if you claim it.
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Sources
The primary documents this page is built from. Links checked 5 September 2026.
- HMRC — Rates and thresholds for employers 2026 to 2027 — GOV.UK / HMRC
- NIM02365 - Class 1 NICs: Earnings of employees and office holders: Superannuation contributions — GOV.UK / HMRC manual
- Pension tax relief: salary sacrifice — Low Incomes Tax Reform Group (LITRG)
- Salary sacrifice for employers — GOV.UK
- National Minimum Wage and National Living Wage rates — GOV.UK