Pension Contribution on £120,000 UK Salary
At 5% pension sacrifice on £120,000, $£6,000 goes into your pension but only costs £2,280 from your take-home — 62% tax + NI relief.
Last updated · Tax year 2026/27
| Gross salary | £120,000 |
|---|---|
| Going into pension | −£6,000 |
| Tax + NI relief | +£3,720 |
| Net cost to take-home | −£2,280 |
| Take-home after pension | £73,877 |
Take-home pay
£73,877
62.0% effective tax rate Income Tax plus employee National Insurance as a percentage of your gross salary. Excludes pension, student loan, and HICBC.
- Monthly
- £6,156
- Weekly
- £1,421
- Daily
- £284
- Hourly
- £37.89
Your salary in context
ONS · HMRC · CPI
-
Gross going into pension
£6,000 is invested in your pension pot (before any employer match).
-
Net cost to you
Your take-home drops by only £2,280 a year — not the full £6,000 contribution.
-
Tax + NI relief
Salary sacrifice saves £3,720 in Income Tax and National Insurance — 62% of the contribution.
-
Take-home without vs with
Without pension: £76,157/year. With pension: £73,877/year.
-
Marginal rate
Your highest Income Tax band is Higher rate at 40%. Contributions come off the top, so relief starts at this rate.
-
Monthly take-home change
Monthly take-home falls from £6,346 to £6,156 — a £190 difference per month.
Frequently asked questions
- How much tax relief do I get on pension contributions?
- If you sacrifice salary into pension, you save both income tax and National Insurance at your marginal rate. A basic-rate taxpayer saves 28% (20% IT + 8% NI); a higher-rate taxpayer sacrificing above the UEL saves 42% (40% IT + 2% NI).
- Is salary sacrifice better than relief-at-source?
- Usually yes — salary sacrifice also saves the NI your employer would pay, which some schemes split back into your pension. Relief-at-source only gives income tax relief (not NI) without a claim via Self Assessment.
- What is the annual pension allowance?
- £60,000 per tax year for 2026/27 (raised from £40,000 in April 2023; unchanged since), tapered down to £10,000 for very high earners. Contributions above this lose tax relief.
- Can I claim higher-rate relief if my employer only does basic-rate?
- Yes — if your scheme uses relief-at-source and you pay higher-rate tax, you must claim the additional 20% or 25% through Self Assessment. Salary sacrifice gives you full relief automatically.
- Does this include employer contributions?
- No — we model only your personal contribution. Employer contributions go on top and aren't treated as your income.