2026/27 UK Tax Year
UK Salary Sacrifice Calculator
Estimate how salary sacrifice could affect your Income Tax, National Insurance and take-home pay.
Enter your salary and proposed salary sacrifice to see an estimated before-and-after breakdown.
Free to use • No sign-up required • Estimates only
This is an illustrative example only, based on an England taxpayer with no student loan in the 2026/27 tax year. It is not your result. Use the calculator for figures based on your own salary.
Calculate Your Salary Sacrifice Savings
See how changing your gross salary through salary sacrifice may affect your estimated tax, National Insurance and take-home pay.
Open Salary Sacrifice CalculatorCovers England, Wales, Scotland and Northern Ireland • Pension, electric vehicle, cycle to work and other benefits • Student loan Plans 1, 2, 4, 5 and Postgraduate
See the Difference Salary Sacrifice Can Make
The salary you give up is not the same as the money you lose. Here is what a £5,000 pension sacrifice looks like on a £60,000 salary.
| Metric | Without Salary Sacrifice | With Salary Sacrifice |
|---|---|---|
| Gross Salary | £60,000 | £55,000 |
| Income Tax | £11,432 | £9,432 |
| National Insurance | £3,211 | £3,111 |
| Estimated Take-Home Pay | £45,357 | £42,457 |
Illustrative values only, based on an England taxpayer with no student loan in the 2026/27 tax year. Run your own figures.
How It Works
Three steps, no sign-up, and results update as you type.
Enter Your Salary
Add your annual gross salary, then choose your region and student loan plan so the right tax bands and thresholds are applied.
Enter Your Salary Sacrifice
Enter the amount you plan to give up, annually or monthly, and pick the benefit you would receive in return.
Compare Your Results
See your estimated Income Tax, National Insurance and take-home pay side by side, before and after the sacrifice.
What Salary Sacrifice Can Be Used For
Employers offer different schemes. These are four common types, all handled as modes inside the same calculator.
Pension
The most common use. You give up salary and your employer pays it into your pension instead, so the contribution is made before tax and National Insurance.
How it worksElectric Vehicle
You sacrifice salary for a leased electric car. The car is a taxable benefit-in-kind, charged at 4% of the list price for 2026/27, which the calculator accounts for.
Tax and NI explainedCycle to Work
A bike and accessories are hired through your employer and paid for from gross salary over an agreed period. Scheme rules and end-of-hire fees vary by provider.
How it worksOther Employer Benefits
Schemes such as buying additional annual leave or a workplace nursery place. Availability and terms depend entirely on what your employer offers.
Try the calculatorWhy Use This Calculator
Built for one job: showing what salary sacrifice does to your pay packet.
Tax & NI Breakdown
Income Tax and employee National Insurance are shown as separate figures, so you can see exactly where the saving comes from.
Before & After Comparison
Every figure is shown twice, on your current salary and your reduced salary, with the difference calculated for you.
2026/27 UK Tax Year
Uses the current Personal Allowance, Income Tax bands, National Insurance thresholds and student loan thresholds for 2026/27.
No Sign-Up Required
Free to use with no account, no email address and no personal details. Your figures stay in your browser.
UK Tax Regions
Income Tax bands are not the same across the UK. National Insurance is, so the same sacrifice can produce a different saving depending on where you live.
England
Three Income Tax bands: 20%, 40% and 45%. Higher rate starts once taxable income passes the basic rate limit.
Wales
Welsh rates are currently set at the same level as England, so the bands and thresholds match.
Scotland
Scottish Income Tax is set by the Scottish Parliament and uses six bands from 19% to 48%, not three. Because more bands sit between the thresholds, a Scottish taxpayer often saves a different amount from the same sacrifice.
Northern Ireland
Income Tax follows the same bands and thresholds as England and Wales.
Understanding Salary Sacrifice
What salary sacrifice means
Salary sacrifice is a formal agreement between you and your employer. You give up part of your contractual gross salary, and in return your employer provides a non-cash benefit of similar value. Your employment contract is changed, which is why the arrangement is not something you can start and stop freely.
How it affects your taxable salary
The sacrifice happens before PAYE is worked out. That means your reduced salary, not your original salary, becomes the figure your employer runs tax and National Insurance against. If you earn £60,000 and sacrifice £5,000, payroll treats you as a £55,000 earner.
How Income Tax changes
Because your taxable income falls, you pay Income Tax on less money. The saving is made at your marginal rate, so the top slice of your income is the part that disappears. A higher-rate taxpayer saves 40% on the sacrificed amount, while a basic-rate taxpayer saves 20%. If your salary sits between £100,000 and £125,140, sacrificing can also restore part of your tapered Personal Allowance, which is why the saving in that band is unusually large.
How National Insurance changes
Employee National Insurance is charged on your reduced earnings too. The rate depends on where the sacrificed slice sits: 8% if it falls between the Primary Threshold and the Upper Earnings Limit, or 2% if it sits above that. Your employer also pays less employer National Insurance, and some employers pass part of that saving into your pension.
Why take-home pay changes
Your take-home pay does fall, but by less than the amount you sacrifice. You were never receiving the full sacrificed sum in cash, because tax, National Insurance and any student loan repayment came out of it first. The gap between the salary you give up and the take-home pay you lose is your saving.
Frequently Asked Questions
What is salary sacrifice?
Salary sacrifice is an agreement to give up part of your contractual gross salary in exchange for a non-cash benefit, such as pension contributions, an electric car or a bike. Because your gross salary is reduced before PAYE is applied, you pay Income Tax and National Insurance on a lower figure.
How does salary sacrifice affect take-home pay?
Your take-home pay falls, but by less than the amount you sacrifice. On a £60,000 salary, sacrificing £5,000 into a pension reduces take-home pay by around £2,900 rather than the full £5,000, because the remaining £2,100 would have gone to Income Tax and National Insurance anyway.
Does salary sacrifice reduce Income Tax?
Yes. A lower gross salary means less taxable income, so less Income Tax is due. The saving is made at your marginal rate, which is the highest rate you pay. A basic-rate taxpayer saves 20% of the sacrificed amount and a higher-rate taxpayer saves 40%.
Does salary sacrifice reduce National Insurance?
Yes. Employee National Insurance is charged on your reduced earnings. The saving is 8% where the sacrificed amount falls between the Primary Threshold and the Upper Earnings Limit, and 2% where it sits above the Upper Earnings Limit. Your employer saves employer National Insurance as well, though that saving belongs to them unless they choose to pass it on.
Can I use salary sacrifice for a pension?
Pension is the most common use of salary sacrifice in the UK, but it has to be offered by your employer. You cannot set it up yourself. If your employer runs a scheme, the sacrificed amount is paid in as an employer contribution, which is why no personal tax relief needs to be claimed separately.
Can salary sacrifice affect student loan repayments?
Yes. Student loan repayments are worked out on your gross pay after the sacrifice, so a lower salary means a smaller deduction each month. That helps your monthly cash flow, but it also means the balance is repaid more slowly while interest continues to build. The calculator covers Plans 1, 2, 4, 5 and Postgraduate loans.
Does salary sacrifice work differently in Scotland?
The mechanism is identical, but the saving can differ. Scotland sets its own Income Tax bands, with six bands running from 19% to 48% rather than the three used elsewhere in the UK. The rate at which your sacrificed slice would have been taxed therefore depends on where you live. National Insurance is UK-wide, so that part of the saving is the same everywhere.
Is this calculator financial advice?
No. This site provides estimates for information and education only. It cannot take account of your full circumstances, your tax code, other income, or the specific rules of your employer’s scheme. If you are making a significant decision, speak to your employer, your pension provider or a qualified financial adviser.
Important Information
This calculator provides estimates for informational and educational purposes only. Actual payroll results may differ depending on your circumstances, tax code, employer scheme and applicable rules.
Tax rules and thresholds can change. Check current official guidance where appropriate, and see our disclaimer and terms of service for full details.