Salary Sacrifice Calculator UK 2026
Find out exactly how much you save in tax and National Insurance through salary sacrifice in 2025/26. Whether you are sacrificing into your pension, an electric car lease, a cycle to work bike, or childcare vouchers, this calculator gives you a full breakdown - including your new take-home pay, total pension boost, and employer NI savings. Use it alongside our take-home pay calculator to see the complete picture.
Key Salary Sacrifice Facts for 2025/26
Who Should Use This Calculator?
Employees Planning Pension Contributions
See exactly how much extra pension you get for every pound you sacrifice, plus the true net cost to your take-home pay after tax and NI relief.
EV Drivers Considering an Electric Car Scheme
Model the real cost of an electric car lease through salary sacrifice, including the small BiK tax charge, to see your net saving versus a personal lease.
Cycle to Work Scheme Users
Calculate how much you save in tax and NI on a bike and safety equipment purchase, and check whether you stay above the National Living Wage.
Employers and HR Teams
See the NI saving your business makes per employee and model how passing those savings to staff pensions changes the total reward package. Compare with our employer NI cost calculator.
⚛ Calculate Your Salary Sacrifice Savings
Enter your details below. All fields marked * are required. Results appear instantly.
How the Salary Sacrifice Calculator Works
Enter Your Salary
Input your gross annual salary and choose your tax year. We convert weekly or monthly pay to an annual figure automatically.
Choose Your Sacrifice
Select what you are sacrificing - pension, EV lease, cycle to work, or childcare vouchers - and enter the amount or percentage.
Calculations Run Instantly
We apply 2025/26 HMRC income tax bands, National Insurance thresholds, and the correct BiK rates to produce your personalised figures.
Review Full Breakdown
See your before and after take-home pay, total savings, pension boost, employer NI saving, and actionable tips - all in one place.
Salary Sacrifice UK 2026 - What You Need to Know
Salary sacrifice (or salary exchange) reduces your gross pay by an agreed amount in return for a non-cash benefit. Because you pay income tax and National Insurance on your reduced salary, you keep more of your money. Your employer also pays less in employer NI (15% in 2025/26 on earnings above £5,000), and many pass that saving directly into your pension.
Tax and NI Savings by Band
The saving you make depends on your tax band. A basic rate taxpayer saves 20% income tax plus 8% employee NI on the sacrificed portion - a combined rate of 28%. A higher rate taxpayer saves 40% tax plus 2% NI, totalling 42%. Additional rate taxpayers save 45% plus 2% NI, reaching 47%. Use the income tax band calculator to confirm your current band.
| Tax Band | Income Range | IT Rate | NI Rate | Combined Saving |
|---|---|---|---|---|
| Basic Rate | £12,571 - £50,270 | 20% | 8% | 28% |
| Higher Rate | £50,271 - £125,140 | 40% | 2% | 42% |
| Additional Rate | Over £125,140 | 45% | 2% | 47% |
| Employer | Above £5,000 | - | 15% | 15% |
Pension Sacrifice
Pension salary sacrifice is the most popular arrangement. You agree to reduce your gross salary by your pension contribution amount, and your employer pays the equivalent into your pension pot. Your take-home pay falls slightly because your taxable pay is lower, but the net cost to you is much less than the contribution made. Learn more about pension planning with our pension contribution calculator.
Electric Cars and the 3% BiK Rate
Pure electric vehicles leased through a salary sacrifice scheme attract a BiK tax of just 3% of the car's P11D value in 2025/26. Even accounting for this small tax charge, most basic and higher rate taxpayers save 20-50% compared to a personal lease. The scheme is exempt from HMRC's Optional Remuneration Arrangement (OpRA) rules, making it particularly tax-efficient.
Cycle to Work and Childcare Vouchers
The cycle to work scheme lets you hire a bike and safety equipment tax-free through your employer. There is no statutory upper limit since 2011, though many employers cap schemes at £1,000 or £2,000 without an authorised exemption. Childcare vouchers are closed to new entrants since October 2018 - only existing scheme members can continue. If you pay for childcare, consider Tax-Free Childcare via HMRC instead.
⚡ April 2029 Change - Pension NI Cap
From April 2029, the Autumn Budget 2025 will cap the employee NI exemption on pension salary sacrifice at £2,000 per year. Employees contributing more than £2,000 via sacrifice will pay NI on the excess. This does not affect your 2025/26 or 2026/27 savings - this calculator reflects current rules only.
Important Limits and Restrictions
Your salary after sacrifice cannot fall below the National Living Wage (£12.21/hour for workers aged 21+ in 2025/26). Sacrifice arrangements must be agreed in writing with your employer and cannot be changed mid-year without a valid life event (such as a change in family circumstances). Sacrificing salary may also affect maternity pay, redundancy calculations, and mortgage affordability - see our maternity pay calculator for details.
Real Salary Sacrifice Examples 2025/26
Scenario 1: Basic Rate Taxpayer - Pension
Person: Sarah, Marketing Executive
Salary: £32,000 | Sacrifice: £2,400/year (7.5%) into pension
Income Tax Saved: £480/year (20% of £2,400)
NI Saved: £192/year (8% of £2,400)
Total Saving: £672/year (£56/month)
Net Cost of £2,400 Pension: £1,728
Sarah's employer also saves £360/year in NI and passes half (£180) into her pension - boosting her pot by £2,580 for a net outlay of £1,728.
Scenario 2: Higher Rate Taxpayer - Electric Car
Person: James, Senior Software Engineer
Salary: £72,000 | EV Lease: £600/month gross
Gross Lease Cost: £7,200/year
Income Tax + NI Saved: £3,024/year (42%)
BiK Tax (3% of £38,000 P11D at 40%): £456/year
Net Saving vs Personal Lease: £2,568/year
James saves £214/month on his EV compared to a personal lease. Use our remote work savings calculator to factor in commuting costs too.
Scenario 3: Approaching £50,270 - Pension Taper
Person: Priya, NHS Band 7 Nurse
Salary: £48,000 | Sacrifice: £3,000/year into pension
Without Sacrifice: £2,730 higher-rate tax (on £2,730 above basic band)
With Sacrifice: Taxable income drops to £45,000 - stays in basic rate entirely
Extra Saving: £546 compared to standard calculation
Total Saving: £1,386/year
Priya avoids the higher rate band entirely by sacrificing £3,000 - a strategy also worth exploring with our personal allowance taper calculator if your salary approaches £100,000.
Salary Sacrifice FAQs
Salary sacrifice is an agreement between you and your employer to reduce your gross pay in exchange for a non-cash benefit such as pension contributions, an electric car lease, a cycle to work bike, or childcare vouchers. Because the sacrifice reduces your taxable earnings, you pay less income tax and National Insurance on that portion of your salary.
Savings depend on your tax band. A basic rate taxpayer sacrificing £3,000 saves around £672/year (20% IT + 8% NI). A higher rate taxpayer saves around £1,260/year (40% IT + 2% NI). Use the calculator above for your exact figures based on your specific salary.
As long as your salary after sacrifice remains above the NI Primary Threshold (£12,570 in 2025/26), you will continue earning NI credits towards your State Pension. Most workers are well above this level. If you earn close to £13,000-£15,000, double-check before sacrificing a large amount.
Yes. Mortgage lenders and benefit assessors typically use your contractual (post-sacrifice) salary. This can reduce how much you can borrow, or affect means-tested benefits and Tax Credits. Statutory payments including Statutory Maternity Pay and redundancy pay are also based on your reduced contractual salary in most cases. See our redundancy pay calculator for details.
Your employer must ensure your cash pay after sacrifice does not fall below the National Living Wage, which is £12.21/hour for workers aged 21 and over in 2025/26. If the sacrifice would breach this, your employer must reduce the sacrifice amount. Our calculator flags this automatically using your hours worked per week.
No. The Autumn Budget 2025 announced that from April 2029, the NI exemption on pension salary sacrifice will be capped at £2,000 per year. Until then, you receive full NI relief on any pension sacrifice amount. This calculator reflects the current 2025/26 rules - the cap is flagged as a future alert only.
Salary sacrifice must be agreed in writing and forms part of your employment contract. In most cases you cannot change it mid-year unless you have a genuine life event such as marriage, divorce, birth of a child, or a significant change in financial circumstances. Check your scheme rules with HR.
Generally yes - higher rate taxpayers see the largest combined saving (42% of the sacrifice amount). If your income is near the £50,270 threshold, sacrificing into a pension can also bring your taxable income into the basic rate band, saving an extra 20% on that margin. Check the comparison with our pay rise after tax calculator to see the full picture.
Data Sources and Accuracy
This calculator uses official HMRC figures for 2025/26:
- Income Tax Bands and Rates: HMRC Rates and Thresholds 2025-26
- National Insurance Thresholds: HMRC NI Rates and Allowances
- Salary Sacrifice Rules: HMRC Salary Sacrifice Guidance
- Electric Car BiK Rate (3%): HMRC BiK Rates
- April 2029 NI Cap: HMRC - Salary Sacrifice Pension Reform 2029
- National Living Wage (£12.21/hour): GOV.UK - National Minimum Wage Rates
Methodology: Tax and NI calculated on reduced gross salary using 2025/26 band thresholds. Employer NI calculated at 15% above the secondary threshold (£5,000/year). BiK for EVs uses 3% rate on P11D value. All figures are estimates and may differ from your actual payslip due to other deductions.
Last Updated: February 2026.
Disclaimer: This calculator provides estimates for informational purposes only. It is not financial advice. Individual circumstances including pension schemes, contractual terms, and tax codes vary. Always consult a qualified financial adviser or HMRC directly before making decisions based on these figures.
Scotland uses different income tax bands. The Scotland option in this calculator applies Scottish rates from 2025/26 as confirmed by the Scottish Government.
Your Privacy and Data Protection
Your privacy matters. This calculator operates entirely in your browser using client-side calculations. We do not store, transmit, or collect any of the financial data you enter.
How It Works: Your salary and sacrifice figures are sent to our server only to perform calculations via a secure PHP script, then immediately discarded. No personal data is logged, saved, or shared with third parties. Session storage is used purely to remember your form inputs during your visit.