Sacrificing salary into your pension dodges both Income Tax and National Insurance — a saving an ordinary pension contribution can't match. Enter your salary and sacrifice to see your new take-home pay and exactly what you gain.
Pension sacrifice · England, Wales & NI
With salary sacrifice you formally give up part of your gross salary, and your employer pays it straight into your pension. Because that money never counts as your pay, you escape both Income Tax and National Insurance on it. A standard relief-at-source pension only saves the Income Tax — so sacrifice is usually the more efficient route.
| £100 sacrificed by… | Tax saved | NI saved | Net cost |
|---|---|---|---|
| Basic-rate (20%) | £20 | £8 | £72 |
| Higher-rate (40%) | £40 | £2 | £58 |
| £100k–£125k band | £40+ | £2 | ~£40 |
See the full picture of your pay after sacrifice with the take-home pay calculator, or project the pension itself with the pension calculator.
The sacrificed amount never counts as your pay, so you avoid the 8% (or 2%) employee National Insurance on it as well as the Income Tax. A relief-at-source pension only saves the Income Tax.
Less than the amount going in. A basic-rate taxpayer sacrificing £100 typically loses only about £72 of take-home pay because £20 tax and £8 NI are saved.
For most employees yes — it saves both tax and NI, and many employers add part of their own NI saving to your pot too.
No — your cash salary after sacrifice must stay above the National Minimum or Living Wage, so there is a limit to how much lower earners can sacrifice.
