Salary Sacrifice Calculator 2026/27
See what you really save on income tax and National Insurance when you swap gross pay for a pension, a bike, an electric car or childcare vouchers — and what it costs your take-home each month.
Calculate your saving
Your salary before any sacrifice
Scottish rates apply to salary, not to NIC
Enter monthly amounts for each scheme you use. Leave a scheme at £0 if it does not apply.
Monthly pension via salary sacrifice
Monthly cycle scheme repayment
Monthly EV lease via sacrifice
Max £243/month, existing members only
Any other salary sacrifice benefit
Sacrifice cuts the 9% (6% PGL) deduction too
Treated as an existing sacrifice, taken before the new one
Some employers pass on their 15% NIC saving
About salary sacrifice
Salary sacrifice (also called salary exchange) is an arrangement between you and your employer where you give up part of your gross salary in exchange for a non-cash benefit. Because the sacrifice happens before income tax and National Insurance are calculated, both you and your employer pay less.
In 2026/27 the saving per £1 sacrificed is:
- 28% for a basic rate taxpayer — 20% income tax plus 8% employee NIC.
- 42% for a higher rate taxpayer — 40% plus 2% NIC above the £50,270 upper earnings limit.
- about 62% between £100,000 and £125,140, where sacrificing also reinstates the tapered personal allowance.
- 47% above £125,140 — 45% plus 2%.
Your employer separately saves 15% employer NIC on any sacrificed pay above the £5,000 secondary threshold, and pays no NIC at all on the pension contribution itself.
Common salary sacrifice schemes include:
- Pension contributions — the most popular scheme. Your employer pays the sacrificed amount straight into your pension, so you save income tax and NIC and the contribution carries no employer NIC.
- Cycle to work — hire a bicycle and accessories tax-free, typically saving 28–42% of the retail price.
- Electric vehicles — lease an EV through your employer. The benefit in kind is charged at a low percentage of list price, which usually still beats a personal lease.
- Childcare vouchers — closed to new applicants since October 2018, but existing members can carry on, capped at £243 a month for a basic rate taxpayer.
Limits worth knowing
- Pension annual allowance £60,000 for 2026/27, unchanged from 2025/26. It counts employer contributions — which is what your sacrifice becomes — as well as your own, and unused allowance from the three previous tax years can be carried forward.
- Tapered annual allowance — £1 lost for every £2 of adjusted income over £260,000 where threshold income also exceeds £200,000, down to a £10,000 floor. Sacrifice reduces threshold income, which is part of the point.
- Money purchase annual allowance £10,000 once you have flexibly accessed a pension.
- National Minimum Wage — sacrifice cannot take your cash pay below it. The National Living Wage is £12.71 an hour for age 21 and over from 1 April 2026 (£12.21 in 2025/26).
For contractors inside IR35 working through an umbrella company, a salary sacrifice pension is one of the few levers left on an assignment rate. For PSC directors, an employer pension contribution from the company achieves the same thing — model that with our IR35 calculator.
From 6 April 2029 the government will cap the NIC exemption on sacrificed pension contributions at £2,000 a year. Until then the exemption is uncapped and salary sacrifice remains one of the most tax-efficient things a UK employee can do with gross pay.
| Item | 2026/27 | 2025/26 |
|---|---|---|
| Personal allowance | £12,570 | £12,570 |
| Basic rate 20% on taxable income | up to £37,700 | up to £37,700 |
| Higher rate 40% on taxable income | £37,701–£125,140 | £37,701–£125,140 |
| Additional rate 45% | above £125,140 | above £125,140 |
| Allowance taper | £1 per £2 over £100,000 | £1 per £2 over £100,000 |
| Employee NIC | 8% £12,570–£50,270, then 2% | 8% £12,570–£50,270, then 2% |
| Employer NIC | 15% above £5,000 | 15% above £5,000 |
| Pension annual allowance | £60,000 | £60,000 |
| Scottish starter / basic band top | £16,537 / £29,526 | £15,397 / £27,491 |
| Student loan Plan 1 / 2 / 4 | £26,900 / £29,385 / £33,795 | £26,065 / £28,470 / £32,745 |
| Plan 5 / postgraduate | £25,000 / £21,000 | £25,000 / £21,000 |
| National Living Wage, 21 and over | £12.71/hour | £12.21/hour |
| Salary sacrifice NIC exemption | uncapped | uncapped |
The rUK income tax and NIC figures are identical in both years — the thresholds are frozen to 5 April 2031. What moved at April 2026 was the Scottish starter and basic thresholds, the Plan 1/2/4 student loan thresholds and the National Living Wage.
Frequently asked questionsSalary sacrifice is an arrangement where you agree to give up part of your gross salary in exchange for a non-cash benefit such as pension contributions, a cycle-to-work scheme, an electric vehicle, or childcare vouchers. Because the sacrifice happens before tax and NIC are calculated, you pay less income tax and National Insurance.
It depends on your band and the amount. In 2026/27 a basic rate taxpayer saves 28% on every pound sacrificed (20% income tax + 8% employee NIC) and a higher rate taxpayer saves 42% (40% + 2%). Between £100,000 and £125,140 the reinstated personal allowance lifts it to roughly 62%. Your employer separately saves 15% employer NIC on the sacrificed pay above the £5,000 secondary threshold.
No. Your cash pay after sacrifice cannot fall below the National Minimum Wage — £12.71 an hour for workers aged 21 and over from 1 April 2026, up from £12.21. The calculator warns you if your sacrifice would breach that, based on a standard 37.5-hour week.
It can. Salary sacrifice reduces your official salary, which may affect mortgage affordability assessments, statutory maternity and paternity pay, and other salary-linked benefits. Many employers use a 'reference salary' for those calculations — check with your employer or HR department.
Some employers pass on their 15% employer NIC saving as an extra pension contribution or benefit. This calculator shows both scenarios — switch 'Employer shares NI saving' under Advanced options to compare. Ask your employer whether they operate an NI sharing arrangement.
The annual allowance is £60,000 for 2026/27, unchanged from 2025/26, and it counts employer contributions — which is what a sacrificed amount becomes — as well as your own. Unused allowance from the three previous tax years can be carried forward. The allowance tapers by £1 for every £2 of adjusted income over £260,000 where threshold income also tops £200,000, down to a £10,000 floor, and the money purchase annual allowance is £10,000 once you have flexibly accessed a pension. Because a sacrifice becomes an employer contribution, the "100% of relevant UK earnings" limit on personal contributions does not apply to it — but the annual allowance still does.
A £2,000 cap on the NIC exemption for salary-sacrificed pension contributions starts on 6 April 2029. Sacrifice above £2,000 a year will attract National Insurance from that date. Nothing changes for 2026/27 — the exemption is uncapped, and this calculator applies the uncapped rules to both 2026/27 and 2025/26. The secondary legislation setting out the detail (how the £2,000 is split across pay periods or multiple employments, and whether it is indexed) has not been published yet.
Sacrificing salary to save tax? An accountant handles the rest.
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Compare contractor accountants →Featured firms pay to appear. All specialise in contractors.This calculator provides arithmetic calculations only, on the assumption that the sacrifice is a valid, contractually agreed variation of your terms. Your position depends on your contract and your employer's scheme rules. Verify with HMRC guidance on salary sacrifice or a qualified accountant.