2026/27 UK Tax Year
UK Salary Sacrifice Calculator
Estimate how salary sacrifice could affect your Income Tax, National Insurance and take-home pay.
Free to use • No sign-up required • Estimates only
Salary
Your gross pay before any tax, National Insurance or sacrifice is taken.
Tax Details
Income Tax bands differ in Scotland. National Insurance is the same across the UK.
Salary Sacrifice
The amount of gross salary you give up. Enter it annually or monthly.
Benefit
What you receive in exchange for the salary you give up.
Note. Your salary sacrifice contribution is set in section 03. Employer contributions and passed-on NI increase the value of your pension pot, but they do not change your take-home pay.
Other benefit. This mode uses the sacrifice amount from section 03 with no benefit-in-kind charge applied. Use it for benefits such as additional annual leave purchase or workplace nursery. If your benefit is taxable as a benefit-in-kind, your actual saving will be lower than shown.
Your Estimated Salary Sacrifice Result
- Tax Saved
- £0
- NI Saved
- £0
- Take-Home Reduction
- £0
- Benefit Value
- £0
What does the benefit really cost you?
The salary you give up is not what you lose from your pocket.
| Metric | Before | After | Difference |
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| Period | Before | After |
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Things to check before you decide
How We Calculate Your Estimate
The calculator runs your figures twice: once on your current salary, and once on your salary after the sacrifice. The difference between the two is your estimated saving.
Gross salary
Your total annual pay before any deductions. This is the starting point for every other figure on the page.
Salary sacrifice
You give up an agreed amount of gross salary in return for a non-cash benefit. Because the sacrifice happens before tax and National Insurance are worked out, your reduced salary becomes the basis for all PAYE deductions.
Taxable salary
Your reduced gross salary, less your Personal Allowance. The standard Personal Allowance for 2026/27 is £12,570. It is reduced by £1 for every £2 of income above £100,000 and reaches zero at £125,140. If your benefit carries a benefit-in-kind charge, such as an electric car, that charge is added to your income before the allowance is worked out.
Income Tax
Applied band by band to your taxable income. England, Wales and Northern Ireland use three bands: 20%, 40% and 45%. Scotland uses six bands running from 19% to 48%, set separately by the Scottish Parliament.
National Insurance
Employee Class 1 National Insurance is charged at 8% on earnings between £12,570 and £50,270, and 2% above that. National Insurance is UK-wide, so Scottish taxpayers pay the same rates. Benefit-in-kind charges are not subject to employee National Insurance.
Student loan
Repayments are a percentage of earnings above your plan threshold, taken through payroll. Because salary sacrifice reduces your gross pay, it also reduces your student loan repayment. That is a genuine cash-flow saving now, but the outstanding balance still accrues interest.
Take-home pay
Your reduced gross salary, minus Income Tax, minus employee National Insurance, minus any student loan repayment. The gap between your take-home pay before and after is the real cost of the benefit to you.
Tax rules and thresholds can change. Check current official guidance where appropriate. This calculator produces estimates using standard annual PAYE assumptions and a standard tax code. It does not account for a non-standard tax code, multiple jobs, taxable benefits other than those selected, other income, marriage allowance, pension annual allowance limits, or workplace scheme rules. It is not financial advice.
Frequently Asked Questions
What is salary sacrifice?
Salary sacrifice is a formal agreement to give up part of your contractual gross salary in return 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 less Income Tax and less National Insurance on the reduced amount.
Does salary sacrifice reduce my take-home pay?
Yes, but by less than the amount you sacrifice. If you sacrifice £5,000 of gross salary, your take-home pay does not drop by £5,000, because you were never taking home the full £5,000 in the first place. The Income Tax, National Insurance and student loan repayments you would have paid on that money are what make up the difference.
How much can I actually save?
It depends on your marginal rate. A basic-rate taxpayer typically saves around 28% of the amount sacrificed through Income Tax and National Insurance combined. A higher-rate taxpayer typically saves around 42%. Someone earning between £100,000 and £125,140 can save around 60% or more because sacrificing salary also restores part of their tapered Personal Allowance.
Is salary sacrifice worth it if I earn just over £100,000?
This is usually where salary sacrifice is most effective. Between £100,000 and £125,140 you lose £1 of Personal Allowance for every £2 of income, creating an effective marginal Income Tax rate of around 60%. Sacrificing salary back below £100,000 restores the full allowance, so a large share of what you give up comes straight back as tax saved.
Does salary sacrifice affect my student loan repayments?
Yes. Student loan repayments are calculated on your gross pay after sacrifice, so a sacrifice reduces the amount deducted each month. This improves your monthly cash flow, but it also means you repay the loan more slowly and interest continues to accrue on the outstanding balance.
Can salary sacrifice reduce my pay below the National Minimum Wage?
No. Salary sacrifice cannot take your pay below the National Minimum Wage or National Living Wage for the hours you work. Employers are legally required to check this, and they will normally cap or refuse a sacrifice that would breach the limit. If you are on or near the minimum wage, your employer may not be able to offer the scheme at all.
How is the tax on an electric car salary sacrifice worked out?
You give up gross salary, which cuts your Income Tax and National Insurance, but you receive a company car, which is a taxable benefit-in-kind. For 2026/27 the benefit-in-kind rate for a fully electric car is 4% of the P11D list price. That taxable amount is added to your income and taxed at your marginal rate. The rate is scheduled to rise in later tax years, so the charge will increase over a long contract.
Will salary sacrifice affect my mortgage application?
It can. Most lenders assess affordability on your contractual gross salary, which is the reduced figure after sacrifice. A large sacrifice can therefore reduce the amount you are able to borrow. Some lenders will add certain sacrificed amounts back, particularly pension contributions, but policies vary. If you are planning to apply for a mortgage soon, it is worth checking with a broker before committing.
Does my employer save money too?
Yes. Because your gross salary is lower, your employer pays less employer National Insurance, currently 15% on earnings above £5,000 a year. Some employers pass part or all of that saving into your pension pot, and some keep it to fund the scheme. The calculator shows the employer saving separately and never adds it to your own take-home figures.
What else could salary sacrifice affect?
Anything linked to your gross salary can be affected. That includes statutory maternity, paternity and sick pay, life cover and income protection based on a multiple of salary, redundancy pay, overtime rates, and future pay rises calculated as a percentage. If your reduced pay falls below the National Insurance Lower Earnings Limit, you may also stop building qualifying years towards the State Pension. Check your scheme documents and speak to your employer or a qualified adviser before you commit.