Salary Sacrifice Optimiser 2026/27
Find the salary sacrifice percentage that maximises your pension build per £ of take-home given up. The curve highlights the 62% PA-taper "sweet spot" where every £1 sacrificed costs you just 38p in net pay but adds £1 to your pension.
Your scenario
Sacrifice ladder: 0% to 30%
Each row shows what changes at that sacrifice %. The "Cost per £1" column is the key efficiency metric: it's the £ of net pay you lose per £1 added to pension. Lower = better.
How salary sacrifice maths works
- Salary sacrifice = gross pay reduction. Your contractual gross is reduced by the sacrifice amount. Tax + NI are then calculated on the reduced gross, so you save tax AND NI on each £ sacrificed (relief-at-source schemes only save Income Tax).
- Net cost per £1 of pension depends on marginal rate. Basic-rate (20% IT + 8% NI): 72p net cost per £1 pension. Higher-rate (40% IT + 2% NI): 58p net cost per £1 pension. Additional-rate (45% IT + 2% NI): 53p net cost. PA-taper band (£100k-£125,140; 62% effective): 38p net cost per £1 pension.
- The PA-taper sweet spot. Above £100,000, you lose £1 of Personal Allowance for every £2 earned (full taper at £125,140). The implicit marginal rate is 60% + 2% NI = 62%. Each £1 sacrificed back below £100k reverses this 62% deduction. Best £-for-£ tax move available in UK personal finance.
- HICBC region (£60k-£80k). If you receive Child Benefit, the £60k-£80k slice has an additional effective rate from Child Benefit clawback (10% per child equivalent). Pension sacrifice that drops adjusted net income below £60,000 fully resets the charge.
- Hard limits. The £60,000 Annual Allowance caps tax-relieved contributions; above that triggers an Annual Allowance Charge equal to your marginal rate. Combined employee + employer contribution counts. Most workers below £100,000 won't hit it.
Three worked examples
£40,000 basic-rate
5% sacrifice = £2,000/yr to pension at net cost of £1,440 (28% IT+NI relief). 10% sacrifice = £4,000/yr at net cost of £2,880. Each pension £ costs 72p of take-home. Modest but compounds heavily over 30 years.
£65,000 higher-rate + HICBC
With 2 children: HICBC charges around £2,250 over £60,000. Sacrificing 8.5% (~£5,500/yr) drops adjusted net income below £60,000, eliminating HICBC AND saving 42% IT+NI on the sacrifice. Net cost per £1 pension drops to ~25p when HICBC reset is included.
£115,000 PA-taper trap
Sitting in the 62% effective marginal rate band. Sacrificing £15,000 brings adjusted net income to £100,000 - restores full £12,570 Personal Allowance, restores eligibility for Tax-Free Childcare + 30 free childcare hours. Net cost per £1 pension: 38p. The highest-yield tax move in UK personal finance.
Practical caveats
- Sacrifice cannot push gross below the National Living Wage (£12.71/hr from April 2026 for over-21s). Your employer is legally bound to maintain NMW post-sacrifice.
- Mortgage affordability uses gross salary, not post-sacrifice. Lenders may use the lower figure - check with your broker before sacrificing aggressively if you're about to apply for a mortgage.
- Life cover / income protection / death-in-service often calculated as a multiple of gross. Sacrificing reduces these benefits unless your scheme uses a "notional salary" for these calculations.
- Some employers cap sacrifice at 30% or 40% of gross. Check your scheme rules before committing.
- Not financial advice. The optimal % depends on personal cashflow, debt position, and savings goals. Use regulated financial advice for retirement planning decisions.