How much tax relief do I get on pension contributions?

You get relief at your top tax rate: 20% if you're a basic-rate taxpayer, 40% if you're higher rate, 45% if you're additional rate. Higher and additional rate taxpayers in non-salary-sacrifice schemes have to claim the extra through Self Assessment. Salary sacrifice does even better because you also save 8% (or 2%) in employee National Insurance, and your employer saves 15% in NI on top.

Is salary sacrifice better than relief-at-source?

Usually, yes. Salary sacrifice avoids income tax and National Insurance. So a higher-rate taxpayer gets 42% relief instead of 40%. If your employer also adds their 15% NI saving back into your pot, you can clear 50% relief. The trade-off is that your gross salary on paper goes down, which can matter for mortgage applications, statutory maternity or paternity pay, and student loan repayments.

What is the annual allowance for pensions?

£60,000 a year across all your pensions for most people. For the tapered annual allowance, both threshold income and adjusted income matter: the allowance is not reduced if threshold income is £200,000 or less, even if adjusted income is higher. You can carry forward unused allowance from the past three tax years if you were in a registered pension scheme.

Does a pension contribution help if I'm in the 60% tax trap?

It can be one of the most efficient routes if it fits your circumstances. Earnings between £100,000 and £125,140 face a 60% income-tax effect because you lose £1 of personal allowance for every £2 above £100,000; standard employee examples are about 62% including NI. Salary sacrifice depends on employer rules and must not reduce cash earnings below National Minimum Wage.

afterax

Get started

Salary Sacrifice Calculator UK 2026/27

Calculator

Salary sacrifice

UK 2026/27

Base salary

Bonus, RSUs, other income

Bonuses and stock are taxed as income and aren't part of pensionable pay. Some employers offer a separate bonus sacrifice option, which is worth asking HR about.

Your contribution

Employee %

Employer match %

Leave as 0 if there is no match. Standard match assumes 1:1: if you put in up to this percentage of salary, your employer puts in the same percentage. Enter a match to reveal custom options.

Tax Region

Estimate how pension salary sacrifice affects take home pay, pension contribution, income tax, employee NI, possible employer match, bonus income and the £100k personal allowance taper. Salary sacrifice only applies if your employer offers it.

Minimum wage check

Age / minimum-wage bandWeekly paid hours

hours

Above selected threshold

Based on £114,000 post-sacrifice pay and 37.5 hours per week, estimated hourly cash pay is £58.46. The selected threshold is £12.71/hr.

Employers must not use salary sacrifice in a way that reduces cash earnings below the minimum wage. Payroll may apply its own safeguards and scheme rules.

Source reviewed 2026-05-08: GOV.UK minimum wage rates.

Calculator

Salary sacrifice

UK 2026/27

Base salary

Bonus, RSUs, other income

Bonuses and stock are taxed as income and aren't part of pensionable pay. Some employers offer a separate bonus sacrifice option, which is worth asking HR about.

Your contribution

Employee %

Employer match %

Leave as 0 if there is no match. Standard match assumes 1:1: if you put in up to this percentage of salary, your employer puts in the same percentage. Enter a match to reveal custom options.

Tax Region

Minimum wage check

Age / minimum-wage bandWeekly paid hours

hours

Above selected threshold

Based on £114,000 post-sacrifice pay and 37.5 hours per week, estimated hourly cash pay is £58.46. The selected threshold is £12.71/hr.

Employers must not use salary sacrifice in a way that reduces cash earnings below the minimum wage. Payroll may apply its own safeguards and scheme rules.

Source reviewed 2026-05-08: GOV.UK minimum wage rates.

Why this beats other pension routes

With salary sacrifice you skip income tax and National Insurance on the contribution. Your employer also saves 15% NIC. Some pass that saving back into your pot, so it's worth asking HR.

Salary sacrifice · 2026/27

Every £1 in your pension costs you just £0.38.

On a £120,000 salary, sacrificing 5% costs £2,280 from take-home and puts £6,000 into your pension. Tax and NI cover the gap.

You give up

-£2,280

£190 less per month

Your pension gets

£6,000

2.63× what it costs you

Cost per £1 in pot

£0.38

62% from tax, NI

Your employer also saves £900 of NI on the sacrifice. Some schemes pay that saving into your pension too.

Try another amount

What if you sacrifice more or less?

£0.38 per £1

At this level, your pension gets £6,000 for £2,280 less take-home pay.

2.63× reaches your pension for every £1 you give up.

0%12.5%25%

Why this works

You swap taxable pay for pension money.

Salary sacrifice lowers your pay before income tax and National Insurance are taken. Your payslip goes down, but more of the same gross income reaches your pension instead of HMRC.

Your employer also saves £900 of NI here. Some schemes add that saving to your pension, so it is worth asking payroll.

Tax and NI breakdownYou save £3,720 before any employer match.+

No sacrifice

£76,157

take home pay a year

£6,346 a month

Gross pay£120,000

Tax + NI£43,843

Into pension£0

After sacrifice

£73,877

take home pay a year

£6,156 a month

Gross pay£114,000

Tax + NI£40,123

Into pension£6,000

Take home a year

-£2,280

Tax + NI saved

+£3,720

Pension and employer money£6,000 goes into the pension.+

Your contribution£6,000

Total each year£6,000

Employer NI saving from this sacrifice: £900.

Annual allowance£54,000 of the standard allowance remains.+

Used this year

£6,000

Remaining

£54,000

Employer included

£0

The standard annual allowance is £60,000. This does not model carry-forward, DB pension input amounts or the tapered annual allowance.

Assumptions and limitsSimple salary sacrifice estimate using published UK rates.+

This is an educational estimate for the 2026/27 tax year. Payroll rules, scheme design, carry-forward allowance and tapered annual allowance can change the answer.

Next useful routes

£100k tax trap

The 60% income-tax effect can be about 62% including employee NI.

Open trap calculator

Salary sacrifice · 2026/27

Every £1 in your pension costs you just £0.38.

On a £120,000 salary, sacrificing 5% costs £2,280 from take-home and puts £6,000 into your pension. Tax and NI cover the gap.

You give up

-£2,280

£190 less per month

Your pension gets

£6,000

2.63× what it costs you

Cost per £1 in pot

£0.38

62% from tax, NI

Your employer also saves £900 of NI on the sacrifice. Some schemes pay that saving into your pension too.

Next useful routes

£100k tax trap

The 60% income-tax effect can be about 62% including employee NI.

Open trap calculator

Where the pension money comes from

62% effective relief

The wider the orange and green slices, the less each £1 in the pot costs you.

Your take-home

£2,280

Tax + NI avoided

£3,720

What goes into the pot

Your contribution£6,000

Total each year£6,000

Your employer's saving

They save £900 in National Insurance because of your sacrifice. Some employers pay this into your pension too. Ask HR if yours does.

Annual allowance tracker

Standard £60,000 limit

Used this year

£6,000

Remaining

£54,000

Employer included

£0

The used figure includes your contribution plus employer money shown in this calculator. It does not include other pension schemes, defined-benefit input amounts or carry-forward allowance.

Your pay, before and after

No sacrifice

£76,157

take home pay a year

£6,346 a month

Gross pay£120,000

Tax + NI£43,843

Into pension£0

After sacrifice

£73,877

take home pay a year

£6,156 a month

Gross pay£114,000

Tax + NI£40,123

Into pension£6,000

What changes

Take home a year

−£2,280

Take home a month

−£190

Tax + NI saved

+£3,720

Try different amounts

0% to 25%

Move the slider to see what changes.

You give up

£2,280

in take home pay

Pension gets

£6,000

2.63× what you gave up

0%12.5%25%

£0.38 per £1 · Pension +£6,000

Estimates onlyShow

Calculations use HMRC published rates for education and illustration. They are not regulated financial, tax, or legal advice. Verify against your own tax position before filing or making financial decisions.

More guides and tools

10 related links

Show

Background reading

7 min read

Is salary sacrifice worth it?

How a £1 of take home pay turns into £2 or £3 in your pension, and the trade offs nobody mentions.

Payroll rule

5 min read

Can salary sacrifice go below minimum wage?

Why employers cap sacrifice and how to check cash pay against the minimum wage.

High earners

Live tool

60% tax trap calculator

See the £100k personal allowance taper and the roughly 62% employee example with NI.

Thresholds

Live tool

Adjusted net income calculator

Connect pension sacrifice, Gift Aid, HICBC and the £100k taper.

Bonus

Live tool

Bonus tax calculator

Compare taking a bonus as cash with sacrificing it into pension.

Child Benefit

Live tool

High Income Child Benefit Charge

See how pension contributions can reduce adjusted net income for HICBC.

Take home

Live tool

Income tax calculator

Check take home pay, NI, student loans and the personal allowance taper.

Threshold map

Live tool

UK Tax Cliff Map

See the £100k allowance and childcare cliffs alongside the £200k/£260k pension taper tests.

Side by side

Live tool

Compare two salary-sacrifice levels

See the take home pay you give up vs the money landing in your pension, multiplier and all.

Where does it all go?

UK public spending 2024/25, line by line

£1.29 trillion across 15 categories, welfare, NHS, debt interest, defence, the lot.

Background reading

How salary sacrifice works in 2026/27

Show

When you sacrifice salary into a pension, if your employer offers it, that money never shows up as pay, so it isn't taxed and you don't pay National Insurance on it either. If your income is between £100,000 and £125,140, the savings can get bigger because you start clawing back the personal allowance you'd otherwise lose. The £60,000 annual allowance can taper for very high earners where threshold income is over £200,000 and adjusted income is over £260,000. Pension annual allowance, carry-forward, defined benefit accrual, and tapered annual allowance calculations can be complex; this calculator is not a substitute for regulated advice.

How much tax relief do I get on pension contributions?
You get relief at your top tax rate: 20% if you're a basic-rate taxpayer, 40% if you're higher rate, 45% if you're additional rate. Higher and additional rate taxpayers in non-salary-sacrifice schemes have to claim the extra through Self Assessment. Salary sacrifice does even better because you also save 8% (or 2%) in employee National Insurance, and your employer saves 15% in NI on top.
Is salary sacrifice better than relief-at-source?
Usually, yes. Salary sacrifice avoids income tax and National Insurance. So a higher-rate taxpayer gets 42% relief instead of 40%. If your employer also adds their 15% NI saving back into your pot, you can clear 50% relief. The trade-off is that your gross salary on paper goes down, which can matter for mortgage applications, statutory maternity or paternity pay, and student loan repayments.
What is the annual allowance for pensions?
£60,000 a year across all your pensions for most people. For the tapered annual allowance, both threshold income and adjusted income matter: the allowance is not reduced if threshold income is £200,000 or less, even if adjusted income is higher. You can carry forward unused allowance from the past three tax years if you were in a registered pension scheme.
Does a pension contribution help if I'm in the 60% tax trap?
It can be one of the most efficient routes if it fits your circumstances. Earnings between £100,000 and £125,140 face a 60% income-tax effect because you lose £1 of personal allowance for every £2 above £100,000; standard employee examples are about 62% including NI. Salary sacrifice depends on employer rules and must not reduce cash earnings below National Minimum Wage.