Calculator · 2026/27
Salary sacrifice calculator
Give up salary and your employer pays it into your pension instead. Because your contractual pay genuinely falls, it saves income tax and both sides of National Insurance — which is the part a personal contribution cannot do.
Your result
Worked example: £5,000 sacrificed on £50,000
| No sacrifice | £5,000 sacrificed | Change | |
|---|---|---|---|
| Contractual pay | £50,000 | £45,000 | −£5,000 |
| Income tax | £7,486 | £6,486 | −£1,000 |
| Your National Insurance | £2,994.40 | £2,594.40 | −£400 |
| Take-home | £39,519.60 | £35,919.60 | −£3,600 |
| Into your pension | — | £5,000 | +£5,000 |
| Employer NI | £6,750 | £6,000 | −£750 |
Take-home falls by £3,600 and £5,000 lands in the pension — so £1 of pension costs £0.72 of spending power. Your employer also saves £750, which some schemes add to the pot. It is worth asking, because a scheme that does not mention it usually keeps it.
Why it beats a personal contribution
A personal pension contribution gets income tax relief. It does not get the National Insurance, because your salary never changed — the money was taxed as earnings before you paid it in. Salary sacrifice changes the salary itself, so the NI is never charged in the first place, on either side.
Four things it quietly reduces
- Mortgage affordability. Lenders assess contractual salary, which is genuinely lower. Some add the contribution back; many do not.
- Statutory maternity pay, which is calculated on post-sacrifice earnings.
- Death-in-service and redundancy pay, where those are a multiple of salary — unless your employer uses a stated notional salary.
- Your State Pension record, if sacrifice takes earnings below the lower earnings limit.
You also cannot sacrifice below the National Minimum Wage; schemes refuse the contribution rather than break the floor. And the pension annual allowance caps total input, tapering for high earners — exceeding it creates a charge that can undo the whole saving.
Where £50,000 sits in the system
Every calculator on this site runs on the same thresholds, and the reason a figure surprises people is almost always that it sits near one of them. This is what is closest to the worked example above — the thresholds that decide what the next pound is worth, rather than what the last one was.
Everything that changes near £50,000 is above it. The nearest is the National Insurance upper earnings limit, at £50,270 — £270 away, which is 0.5% of this salary.
| What changes | At | From here | |
|---|---|---|---|
| National Insurance upper earnings limit | £50,270 | +£270 | ahead |
| Higher rate | £50,271 | +£271 | ahead |
| High Income Child Benefit Charge | £60,000 | +£10,000 | ahead |
Measured against the 2026/27 parameters for England, Wales & Northern Ireland. Distances are on gross pay before any salary sacrifice, because that is the figure every one of these thresholds is tested against.
- £50,270 — Above it your own National Insurance falls from 8% to 2%. That is £270 away, and it is the reason the higher rate stings less at the margin than the headline jump suggests.
- £50,271 — At £271 away this is close enough that a single month's overtime could cross it. Only the pounds above move to the higher rate — nothing you already earn is re-taxed — but the rate on anything extra changes here.
- £60,000 — £10,000 above this, a parent claiming Child Benefit begins paying it back at 1% for every £200 of income — a real marginal rate stacked on tax and National Insurance.
What a ten per cent move would do
A swing of ten per cent either way from £50,000 crosses 2 band changes: at £52,500 the rate on further pay is 42%, and at £55,000 the rate on further pay is 42%, against 28% here. So a rise and a cut of the same size are not mirror images at this salary, and a bonus large enough to move you into the next band is worth proportionally less than the salary it is paid on.
| If pay moved | Gross | Take-home | Change | Next £100 taxed at |
|---|---|---|---|---|
| −10% | £45,000 | £35,919.60 | −£3,600 | 28% |
| −5% | £47,500 | £37,719.60 | −£1,800 | 28% |
| +5% | £52,500 | £41,007.40 | +£1,487.80 | 42% |
| +10% | £55,000 | £42,457.40 | +£2,937.80 | 42% |
And what a pension contribution would buy
There is no threshold within reach below £50,000, so a pension contribution here is not about ducking under anything — it is simply the ordinary trade. Sacrificing £2,500 costs you £1,800 in take-home, because 28% of it was never going to reach you anyway, and puts the full £2,500 into the pot. That is £2,500 of saving for £1,800 of spending power — a ratio of 1.39 to one, and it is the same ratio for every pound until the next band.
Student loans on the same figure
A student loan is not a tax and it is not in any headline rate, but it leaves the same pay packet on the same day — so it belongs in any figure used to make a decision. This is what each plan takes at the worked example above.
Every one of the five repayment thresholds is behind this salary, so whichever plan you are on, you are repaying. Which plan you are on is not a choice, and the difference between them at this salary is £281.55 a year, so it is worth knowing which one your payslip is deducting.
| Plan | Starts at | Repaid a year | A month | Your next £100 |
|---|---|---|---|---|
| Postgraduate Loan | £21,000 | £1,740 | £145 | 34% |
| Plan 5 | £25,000 | £2,250 | £187.50 | 37% |
| Plan 1 | £26,900 | £2,079 | £173.25 | 37% |
| Plan 2 | £29,385 | £1,855.35 | £154.61 | 37% |
| Plan 4 (Scotland) | £33,795 | £1,458.45 | £121.54 | 37% |
A postgraduate loan is repaid alongside an undergraduate one rather than instead of it, so someone with both pays both.
One engine behind all eleven
Every calculator on this site runs the same tax engine, and the engine file your browser downloads is byte-identical to the one that generated these pages — a test asserts it, because two implementations of a tax rule is one too many. So the figures here cannot disagree with the salary tables, the hourly pages or any other calculator: they are the same arithmetic asked a different question. The method page sets out how the bands are discovered rather than typed, and sources lists every parameter with the government page and the date it was read from.
Questions people actually ask
How much does salary sacrifice save?
At £50,000, sacrificing £5,000 costs £3,600 of take-home and puts £5,000 in your pension — £0.72 per pound. In the £100,001–£125,140 band it is far better still, because relief there is given at a 62% marginal rate.
Is salary sacrifice worth it?
For the same money into a pension it is strictly better than a personal contribution, because it saves National Insurance as well as income tax. Whether pension saving is right for you is a different question — it depends on your age, your other savings and when you need the money, which is not something arithmetic can answer.
Does salary sacrifice reduce my mortgage borrowing?
It can. Lenders assess contractual salary and yours is genuinely lower after sacrifice. If a mortgage application is close, check with the lender before increasing it.
What this calculation assumes
- 2026/27 rates for England, Wales & Northern Ireland.
- One employment, paid through payroll, taxed on the standard code with no adjustments carried in.
- Employment income only — no dividends, savings interest, rental or self-employment income.
- No taxable benefits in kind, no company car, no unpaid leave.
- National Insurance category A: the standard case for an employee over 21 and under State Pension age.
- Income Tax is annual, but National Insurance is charged per pay period — a large one-off bonus can pay more NI than this annual view shows.
- No student or postgraduate loan repayment.
- No salary sacrifice and no workplace pension contribution.