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Pension & sal-sac

Pension & sal-sac

Sacrificing 5% · what you get back

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5.26×

You give up £2,280 of take-home pay and £12,000 lands in your pension (5% of £120,000).
81.0% effective relief

2026/27 rates · Last checked · Sources visible below

Your real cost per £1 in the pot

£0.19for every £1 saved

Each £1 in your pension only costs you £0.19 from your take-home. The other £0.81 comes from tax, NIC and your employer.

What goes into the pot

Your contribution£6,000
Employer match (5% of salary)£6,000
Total each year£12,000

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

£12,000

Remaining

£48,000

Employer included

£6,000

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 a year

£6,346 a month

Gross pay£120,000
Tax + NI£43,843
Into pension£0

After sacrifice

£73,877

take-home a year

£6,156 a month

Gross pay£114,000
Tax + NI£40,123
Into pension£12,000

What changes

Take-home a year

−£2,280

Take-home a month

−£190

Tax + NI saved

+£3,720

How the pension is funded

Where each pound in the pot comes from

From your take-home

£2,280

From tax you would have paid

£3,720

From your employer

£6,000

Try different amounts

0% – 25%

Move the slider to see what changes.

You give up

£2,280

in take-home pay

Pension gets

£12,000

5.26× what you gave up

0%12.5%25%

Use this if

  • You want to compare take-home lost with money landing in your pension.
  • Your employer offers salary sacrifice or a workplace pension match.
  • You want to test 60% trap escape contributions.

Not for

  • Tapered annual allowance calculations for very high earners.
  • Carry-forward modelling across the previous three tax years.
  • DB pension input amounts or scheme-specific payroll rules.

Estimates for illustrative and educational purposes only. Calculations use HMRC published rates and are not regulated financial, tax, or legal advice. Verify against your own tax position before filing or making financial decisions.

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Background reading

7 min read

Is salary sacrifice worth it?

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

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 you give up vs the £ 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.

How salary sacrifice works in 2026/27

When you sacrifice salary into a pension, 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 get even bigger because you start clawing back the personal allowance you'd otherwise lose. The annual limit is £60,000 across all your pensions, and it tapers for incomes above £260,000.

  • 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. The limit tapers down if your adjusted income is over £260,000, by £1 for every £2 over the threshold, until it hits a floor of £10,000. You can carry forward any unused allowance from the past three tax years, as long as you were in a registered pension scheme during those years.

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

    It's one of the best things you can do. Earnings between £100,000 and £125,140 are effectively taxed at 60% because you lose £1 of personal allowance for every £2 you earn over £100,000. Pension contributions reverse that. Sacrificing £5,000 in this band costs you only about £2,000 of take-home pay.

Sources & last reviewed

Updated for 2026/27 · last reviewed 15 April 2026 · view changelog →

Bands, thresholds and reliefs on this page come directly from the following official sources. Tax rates are checked against these references whenever a Budget or in-year change is announced.