Salary Sacrifice Calculator

Salary sacrifice calculator: how it works

Salary sacrifice — also called salary exchange — is one of the most effective tax-efficient strategies available to UK employees. By agreeing to reduce your contractual gross salary in exchange for a workplace benefit, you save both income tax and National Insurance on the sacrificed amount — savings that are not available through post-tax purchases. This salary sacrifice calculator uses HMRC 2026/27 rates and thresholds and works for England, Wales, Northern Ireland, and Scotland.

How much do you save with salary sacrifice?

Your saving depends on your marginal tax rate. Because the sacrifice comes out of gross pay, every £100 sacrificed costs you far less than £100 in take-home pay:

• Basic rate (20%) — save 28% (20% income tax + 8% National Insurance).
• Higher rate (40%) — save 42% (40% tax + 2% NI).
• Additional rate (45%) — save 47% (45% tax + 2% NI).
• 60% tax trap (£100,000–£125,140) — save up to 62% as you also recover lost Personal Allowance.

For example, a £10,000 workplace pension contribution via salary sacrifice costs a higher-rate taxpayer an effective £5,800, compared with £8,000 paid from net pay. Scottish taxpayers save at their own marginal rates (starter, basic, intermediate, higher, advanced, and top), which the calculator applies automatically.

How to calculate salary sacrifice manually

To work out a salary sacrifice saving yourself: multiply the amount sacrificed by your combined Income Tax and National Insurance rate — 28% at basic rate, 42% at higher rate, or 47% at additional rate. Sacrificing £300 a month at the higher rate saves £126 a month (£300 × 42%), so it costs £174 from your take-home pay. This calculator does the same sum automatically, but applies your exact tax band, region, and any employer NI passthrough rather than a flat percentage.

Salary sacrifice pension calculator

Pension contributions — sometimes called pension salary exchange — are the most common form of salary sacrifice. Your employer routes the contribution through payroll as a salary reduction instead of you paying it from net pay, so you get the full tax and NI saving automatically rather than claiming relief separately. Many employers also pass on part of their 15% employer NI saving as an extra pension contribution, which this calculator can model with a single toggle.

Salary sacrifice car calculator (electric vehicles)

An electric vehicle salary sacrifice calculator needs to account for Benefit-in-Kind (BIK) tax as well as the sacrifice saving, since HMRC treats the car as a company car benefit. For zero-emission vehicles in 2026/27, BIK is charged at 4% of the car's P11D list price. Even after BIK, an EV sacrifice scheme is typically far cheaper than a personal lease because of the combined tax and NI savings on the sacrificed salary. Cycle-to-work schemes work the same way, without any BIK charge.

Our calculator shows you the exact before-and-after impact on your take-home pay, including income tax, National Insurance, and student loan savings. It also warns you if your sacrifice would breach the National Minimum Wage floor and highlights the potential impact on mortgage affordability.