It compares take-home pay before and after pension salary sacrifice so you can see the tax and National Insurance effect in one place.
PENSION · 2026/27
Salary sacrifice calculator
Pension contribution
£2,500
- Estimated net cost
- £1,800
- Income Tax reduction
- £500
- NI reduction
- £200
See how much goes into your pension and the estimated reduction in take-home pay.
It compares take-home pay before and after pension salary sacrifice so you can see the tax and National Insurance effect in one place.
Salary sacrifice often feels expensive because the pension contribution comes straight out of gross pay. The real cost is lower than the pension payment itself because Income Tax and National Insurance usually fall as well.
- A valid salary sacrifice arrangement normally reduces contractual cash pay before Income Tax and National Insurance are calculated.
SOURCES & REVIEW
Checked against official guidance
Last reviewed 1 September 2026 · Rule version GB-2026.27.1
Daily/weekly source monitoring. If a source changes, the affected rule set is reviewed before publication.
All source links are kept visible so you can verify the figures used on this page.
Source line: Salary sacrifice rules are checked against GOV.UK PAYE guidance and the same income-tax and NI rule set used elsewhere on the site.
GOV.UK: Salary sacrifice ↗Sources, methodology and update policy →Report an issue or correction →WHY RESULTS DIFFER
Why two users can see different results
Why the result can differ
Different tax codes, payroll periods, Scottish bands, pension methods or lender assumptions can change the outcome.
One-off bonuses, pay frequency, overpayments, allowances and reliefs can move the result away from a simple annual estimate.
Where a rule depends on eligibility or legal status, this page shows an estimate and links to official guidance.
This section is intentionally repeated on key tools so the explanation stays near the result instead of being hidden in a separate policy page.
COMMON QUESTIONS
Frequently asked questions
Does salary sacrifice reduce tax?
A valid arrangement normally reduces contractual cash pay before Income Tax and National Insurance are calculated.
Will my employer add its NI saving?
Some employers share all or part of their saving, but this is employer-specific and is not assumed here.
Does it affect student loan repayments?
Yes. If salary sacrifice reduces gross pay, it can also reduce student loan deductions because payroll income falls.
Does it change my pension contribution?
Yes. The sacrificed amount is normally paid into the pension arrangement instead of reaching your cash pay.
Can it affect mortgage borrowing?
Yes. Lower contractual cash pay can affect how lenders read income, even if the pension value is better long term.
Is it the same as a normal pension contribution?
No. Salary sacrifice changes the employment contract before tax and NI are calculated, which is different from a net pay contribution.