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.

Pension Contribution on £25,000 UK Salary

At 5% pension sacrifice on £25,000, $£1,250 goes into your pension but only costs £900 from your take-home — 28% tax + NI relief.

Take-home pay

£20,620

28.0% effective tax rate

Monthly: £1,718
Weekly: £397
Daily: £79
Hourly: £10.57

Gross salary	£25,000
Going into pension	−£1,250
Tax + NI relief	+£350
Net cost to take-home	−£900
Take-home after pension	£20,620

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Your salary in context

ONS · HMRC · CPI

Gross going into pension

£1,250 is invested in your pension pot (before any employer match).
Net cost to you

Your take-home drops by only £900 a year — not the full £1,250 contribution.
Tax + NI relief

Salary sacrifice saves £350 in Income Tax and National Insurance — 28% of the contribution.
Take-home without vs with

Without pension: £21,520/year. With pension: £20,620/year.
Marginal rate

Your highest Income Tax band is Basic rate at 20%. Contributions come off the top, so relief starts at this rate.
Monthly take-home change

Monthly take-home falls from £1,793 to £1,718 — a £75 difference per month.

Nearby salaries

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.