UK Salary Sacrifice Calculator 2026/27
See what salary sacrifice really costs for 2026/27 - pension, cycle-to-work, EV lease, childcare vouchers. Tax + NI savings, all four UK regions.
Take-home pay
£30,880
28.0% effective tax rate Income Tax plus employee National Insurance as a percentage of your gross salary. Excludes pension, student loan, and HICBC.
- Monthly
- £2,573
- Weekly
- £594
- Daily
- £119
- Hourly
- £15.84
| Gross salary | £40,000 |
|---|---|
| Sacrificed | −£2,000 |
| Tax + NI saved | +£560 |
| Net cost to take-home | −£1,440 |
| Take-home after sacrifice | £30,880 |
How salary sacrifice works
You agree with your employer to give up part of your gross salary in exchange for a non-cash benefit. The employer changes your employment contract, and the deduction happens before Income Tax and National Insurance, so you save both on the sacrificed amount (GOV.UK salary sacrifice guidance).
For a £1,000 sacrifice in England, Wales or Northern Ireland:
- Basic-rate taxpayer (20% IT + 8% NI): net cost £720
- Higher-rate above the UEL (40% IT + 2% NI): net cost £580
- Additional-rate (45% IT + 2% NI): net cost £530
Scottish taxpayers save at Scottish Income Tax rates; the calculator above applies them.
Common UK schemes
For a new arrangement, HMRC values most benefits at the higher of the salary given up and the normal benefit-in-kind charge. The exceptions that keep their full tax and NI advantage are pension contributions, employer-provided pensions advice, workplace nurseries, bicycles and cycling safety equipment (cycle to work), and childcare vouchers that started on or before 4 October 2018. Cars with CO2 emissions of no more than 75g/km are always valued under the normal company car rules.
- Pension (the biggest use-case): no Income Tax or NI on the amount paid in by the employer. From April 2029 only the first £2,000 a year of salary-sacrificed pension contributions will be free of NI; Income Tax relief is unaffected (HMRC policy paper).
- Cycle to Work: bikes and cycling safety equipment.
- Electric car lease: a zero-emission company car is taxed at 4% of its list price in 2026/27.
- Childcare vouchers: only for arrangements that started on or before 4 October 2018.
- Other benefits (technology, gym, holiday buy): taxed on the higher of the salary given up and the benefit value, so there is usually little or no tax saving.
Watch out for
- Your reduced cash earnings must not fall below the National Minimum Wage rates.
- Salary sacrifice can reduce statutory payments such as Statutory Maternity Pay, and can affect earnings-related and contribution-based benefits.
- Your employer decides whether pay rises, overtime and pension contributions are worked out on the old salary or the reduced one; this must be made clear to you.
- Mortgage lenders differ on whether they use your salary before or after sacrifice; ask the lender.
Related guides
- Salary Sacrifice Explained — the wider mechanics, eligible schemes, and watch-outs.
- Pension Auto-Enrolment — the floor most employees build sacrifice on top of.
- Company Car Tax (BIK) 2026/27 — the 2026/27 appropriate percentages and how electric cars are taxed.
Related calculators
Other UK tax calculators that pair with the Salary Sacrifice.
Frequently asked questions
What can I sacrifice my salary for?
Common schemes are pension contributions, cycle-to-work, electric or other low-emission cars, and (for people who joined before 4 October 2018) childcare vouchers. For most other benefits, a new arrangement is taxed on the higher of the salary given up and the normal benefit-in-kind value, so the tax saving largely disappears.
How much tax do I save?
The sacrifice is deducted before Income Tax and National Insurance, so you save both. In England, Wales and Northern Ireland: basic rate 28% (20% Income Tax + 8% NI), higher rate 42% (40% + 2% above the Upper Earnings Limit), additional rate 47%. Scottish taxpayers save at Scottish Income Tax rates; the calculator applies them.
Are there any downsides?
A lower cash salary can reduce statutory payments such as Statutory Maternity Pay, and earnings-related or contribution-based benefits. If it takes your earnings below the Lower Earnings Limit (£6,708 a year in 2026/27) you can lose the National Insurance record for State Pension. Employers decide whether pay rises, overtime and pension contributions use the old or reduced salary.
Is salary sacrifice always allowed?
Your employer has to offer it and change your employment contract, and you have to agree. HMRC will not comment on a proposed arrangement before it is in place. A salary sacrifice arrangement must not reduce your cash earnings below the National Minimum Wage rates.
Does this include employer NI savings?
We model only your personal tax and NI saved. Your employer also saves 15% secondary NI on the sacrificed amount, and some employers pass part of that into your pension. From April 2029 only the first £2,000 a year of pension contributions made by salary sacrifice will be free of NI.