Salary & Pay
Pension Salary Sacrifice Calculator
Compare the same pension amount through salary sacrifice and net pay. See the difference in take-home pay, National Insurance and loan repayments for 2026/27.
2026/27 · England, Wales and Northern Ireland · NI category A
Not for Scottish Income Tax or relief-at-source pensions. Your employer must agree the arrangement and check National Minimum Wage. Annual salary alone cannot establish eligibility.
Salary sacrifice versus net pay
The figures below are the last valid comparison, not a result for the current inputs. Correct the highlighted input to recalculate.
Extra annual take-home versus net pay
£60.00
Annual payroll estimate, before any separate HMRC low-earner top-up. Not a lifetime loan saving.
Both pension cases fund £3,000.00 a year. Salary sacrifice leaves £60.00 more annual payroll take-home than net pay, before any separate HMRC top-up.
Original annual salary: £60,000.00. Modelled annual pension: £3,000.00. Cash salary after sacrifice: £57,000.00.
- Extra monthly take-home, average
- £5.00
- Extra Income Tax reduction
- £0.00
- Employee NI reduction
- £60.00
- Lower loan repayments
- £0.00
| Amount | No contribution | Net pay | Salary sacrifice |
|---|---|---|---|
| Cash gross salary | £60,000.00 | £60,000.00 | £57,000.00 |
| Modelled pension funded | £0.00 | £3,000.00 | £3,000.00 |
| Income Tax | £11,432.00 | £10,232.00 | £10,232.00 |
| Employee National Insurance | £3,210.60 | £3,210.60 | £3,150.60 |
| Loan repayments | £0.00 | £0.00 | £0.00 |
| Annual take-home pay | £45,357.40 | £43,557.40 | £43,617.40 |
| Monthly average take-home | £3,779.78 | £3,629.78 | £3,634.78 |
The no-contribution case is a reference, not advice to leave your pension. Both pension cases fund the same amount. Ordinary employer contributions are excluded.
- Pension funded, each pension case
- £3,000.00
- Net-pay pension take-home cost
- £1,800.00
- Salary-sacrifice take-home cost
- £1,740.00
- Sacrifice Income Tax reduction versus no contribution
- £1,200.00
Employer NI, separately
£450.00 annual reduction before Employment Allowance or other reliefs. Not automatically added to your pension or take-home. Ask your employer whether they pass any of it on.
These are annual estimates, not payslips. Monthly figures are annual amounts divided by 12. Payroll periods and rounding can change tax, NI and especially loan deductions. Pension money is not spendable pay.
Minimum wage, pension allowance charges, separate HMRC top-ups, benefits and statutory pay are not checked. Passing input validation is not an eligibility decision.
What this compares
This compares three annual estimates: no modelled pension contribution, an employee net-pay contribution, and a contractual salary sacrifice funding the same pension amount. The reference is arithmetic, not advice to stop pension contributions. Pension money is separate from spendable take-home pay.
How it works
G = original annual salary; S = modelled annual pension amount Net pay: deduct S before Income Tax; NI and loans use G Salary sacrifice: cash salary becomes G − S; tax, NI and loans use reduced pay Extra take-home = sacrifice take-home − net-pay take-home Employer NI reduction = employer NI on G − employer NI on (G − S)
Both pension cases use the same rounded pension amount. Net pay reduces income for tax and the Personal Allowance taper, but not NI or loan earnings. Salary sacrifice reduces contractual cash pay itself; the employer funds that amount into a registered pension. The sacrifice result does not deduct the pension again. Income Tax savings can therefore be the same in the two pension cases, while employee NI and loan deductions differ. Employer NI is estimated at 15% above the £5,000 annual secondary threshold, separately from employee deductions.
A worked example
£60,000 original salary, £3,000 pension and no loans, for 2026/27.
With no modelled pension, annual take-home is £45,357.40. Net pay leaves £43,557.40; salary sacrifice leaves £43,617.40. Both pension cases reduce Income Tax by £1,200. The extra take-home from sacrifice versus net pay is £60 a year, or £5 a month on average, from employee NI. The £3,000 pension costs £1,740 of take-home versus the no-contribution reference. Employer NI falls by £450 before reliefs; that is not automatically paid into your pension. With Plan 2 plus a postgraduate loan, take-home is £38,462.05 through net pay and £38,972.05 through sacrifice: the £510 difference includes £450 lower loan repayments.
What this assumes
- 2026/27, England, Wales and Northern Ireland, one employment, National Insurance category A and a full year at the entered salary.
- Standard Personal Allowance, including the £1 for £2 taper above £100,000. Only employment income is included in the allowance calculation.
- A valid prospective contractual salary sacrifice into a registered defined-contribution pension. Your employer must agree the arrangement.
- Annual-aligned tax, NI and loan estimates. Monthly results are annual amounts divided by 12, not a predicted payslip.
What it does not model
- Scotland has different Income Tax bands and is not covered. Relief at source, defined-benefit pensions, directors and other NI categories are not modelled.
- Your employer must check National Minimum Wage rules using the relevant hours, age and pay period. Annual salary alone cannot prove eligibility or a safe maximum sacrifice.
- Actual payroll uses period thresholds and rounding. Loan deductions normally discard fractional pounds under HMRC payroll rules; this annual estimate retains pence. Bonuses, changing pay and part-year sacrifice can differ.
- No ordinary employer pension contributions, employer matching, qualifying-earnings defaults or employer NI pass-through. Employer NI reduction is before Employment Allowance and other reliefs, not a guaranteed cash saving.
- Separate HMRC low-earner net-pay top-ups are not included. They may change the overall comparison; these figures are payroll take-home before any top-up.
- Pension annual allowance tax charges are not calculated. The standard £60,000 allowance includes employer and other pension inputs; tapering, money purchase annual allowance and carry-forward can alter it. It is not a universal hard contribution cap.
- Other income, Gift Aid, tax-code changes, multiple jobs, Child Benefit charges, childcare eligibility and other benefits are not calculated.
- Reduced pay can affect statutory payments, benefits, mortgage assessments and life cover. Ask whether your employer uses original reference salary or reduced cash pay for pay rises, overtime and pension benefits.
Questions
Is salary sacrifice the same as a net-pay pension?
No. Net pay is an employee pension deduction before Income Tax; NI and loan earnings stay at original gross pay. Salary sacrifice changes contractual cash salary and the employer funds the pension instead. Confirm your arrangement with payroll. Relief at source is a third method and is not compared here.
Does the employer NI reduction go into my pension?
Only if your employer agrees to pass it on. This calculator shows the reduction before employer reliefs separately and adds none of it to pension or take-home pay. Ordinary employer pension contributions are also excluded.
Are lower student-loan repayments a saving?
They increase present take-home pay, but can leave more debt or interest later. Whether lifetime repayments fall depends on future earnings, interest and write-off. This calculator does not project them.
How much can I safely sacrifice?
This calculator cannot set a safe or legal maximum. Your employer must check National Minimum Wage, and pension allowance rules depend on all your pension inputs and circumstances. It also rejects contributions that make the net-pay comparator unaffordable. Passing input validation is not an eligibility check.
What changes from April 2029?
Treasury guidance announces a £2,000 annual NI-exempt limit on pension funding through salary sacrifice from April 2029, with employee and employer NI on the excess. This is not a pension contribution cap. Income Tax relief remains within its existing limits. The reviewed guidance does not specify an exact start day or establish enacted payroll details. This 2026/27 calculator does not apply that future change.
Sources
- Salary sacrifice and the effects on PAYE (HMRC) (opens in a new tab)
Contract changes, pension sacrifice, minimum wage and reference-salary/benefit effects.
- Rates and thresholds for employers 2026 to 2027 (HMRC) (opens in a new tab)
Tax bands, annual-aligned employee and employer NI, and loan thresholds.
- Employer registered-pension contributions: NIM02716 (HMRC) (opens in a new tab)
Registered employer pension contributions excluded from Class 1 earnings where the exemption applies.
- Income Tax rates and allowances (GOV.UK) (opens in a new tab)
Personal Allowance, taper and rate boundaries.
- 2026/27 student and postgraduate loan deduction tables (HMRC) (opens in a new tab)
NI-linked earnings base, loan thresholds, earnings periods and whole-pound payroll rounding.
- Pension annual allowance (GOV.UK) (opens in a new tab)
Allowance, employer pension inputs and circumstances that change the allowance.
- Relief relating to net-pay arrangements (HMRC policy paper) (opens in a new tab)
Low-earner top-up policy, not verification of the current claim or payment process.
- Changes to salary sacrifice for pensions from April 2029 (HM Treasury) (opens in a new tab)
Future NI announcement; not applied to 2026/27 calculations.
- Formula reviewed
- Formula version
- 1
Version 1 means the formula has not changed since this page was published. If it changes, this number moves and the change is described here.
Formula version 1 compares identical pension funding through net pay and salary sacrifice. The announced April 2029 NI change is not applied to this 2026/27 estimate.