Salary Sacrifice Pension Calculator UK 2025/26

Salary sacrifice pension arrangements save both employers and employees National Insurance contributions by reducing the salary on which NI is calculated. When an employee earning £40,000 sacrifices £3,200 (8%) into their pension via salary sacrifice instead of standard relief at source, both parties save NI on the sacrificed amount — the employee saves 8% (£256 per year) and the employer saves 15% (£480 per year), a combined annual saving of £736. Many employers share their NI saving by adding it to the employee’s pension pot, effectively giving a free boost to retirement savings at no extra cost to the business. Salary sacrifice is especially valuable for higher-rate taxpayers, who automatically receive the full 40% tax relief without needing to claim via self-assessment. The arrangement must genuinely reduce contractual pay to be valid — it cannot be applied retrospectively. This calculator shows the exact NI savings for both parties based on your salary, pension contribution rate, and tax band.

How to Use This Calculator

Enter your annual gross salary before any sacrifice is applied.

Set the total pension contribution percentage — this is the combined employer plus employee rate.

Select your income tax band to see the full tax and NI impact.

Review the NI saving for both employee and employer, plus the effective boost to your pension pot.