Fill in the figures, then click Compare the three ways.
Result
The same contribution, three ways
| Method | Income tax | Employee NI | Loans | Take-home | Cost to you | Into pension |
|---|
What to do
| Step | What it means |
|---|
What it does, and what it leaves to you
- Covers: one employee on a standard tax code in England, Wales, Northern Ireland or Scotland: income tax with the personal allowance taper, employee and employer National Insurance, Student Loan Plans 1, 2, 4 and 5 and Postgraduate Loan, and a pension paid by salary sacrifice, net pay or relief at source.
- Gives: take-home pay and the true cost of the same contribution under each method, the employer NI saving, the effect of the announced April 2029 cap, and the marginal rate on your next pound.
- Not decided: other tax years, other tax codes, second jobs, the pension annual allowance and carry forward, taxable benefits, minimum wage checks, and anything that changed after this was written.
Common questions
What is salary sacrifice for a pension?
You agree to give up part of your gross salary and your employer pays that amount into your pension instead. Because your pay is lower, you pay less income tax, less employee National Insurance and, if you have one, a smaller student loan repayment. Your employer also pays less employer National Insurance, and some employers pass part of that saving into your pension.
Is salary sacrifice better than a net pay arrangement or relief at source?
Usually yes for employees, because it is the only method that also saves National Insurance. On a £55,000 salary with an 8% contribution it costs about £2,156 of take-home pay against £2,640 for net pay or relief at source, for the same £4,400 in the pension. The gap is larger with a Plan 2 student loan because the loan is worked on the lower pay.
What changes in April 2029?
The Autumn Budget 2025 announced that from April 2029 only the first £2,000 a year of salary-sacrificed pension contributions stays free of National Insurance. Anything above that is treated as pay for NI, though income tax relief is unchanged. It is not yet in force, so switch it on in the calculator to see the effect on your own figures.
Can salary sacrifice bring me under the £100,000 tax trap?
Yes. Pension contributions reduce adjusted net income, and between £100,000 and £125,140 each £2 of income removes £1 of personal allowance. Sacrificing enough to get back under £100,000 restores the full £12,570 allowance, which makes the effective relief far higher than the headline rate.
What are the downsides of salary sacrifice?
Your contractual pay is lower, which can reduce mortgage affordability, life cover linked to salary and statutory maternity or sick pay. Your employer must keep your pay at or above the National Minimum Wage after the sacrifice. You also cannot normally change it mid-year.
Is my data uploaded anywhere?
No. Everything is calculated in your browser and nothing is sent.