Salary Sacrifice Tax Calculator
Free UK calculator — instant, accurate results for salary sacrifice tax
💰 Salary Sacrifice Calculator
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Salary Sacrifice Tax Calculator
This calculator quantifies the exact tax and National Insurance savings from salary sacrifice arrangements in the 2025/26 UK tax year. Enter your gross salary and planned sacrifice amount to see the comparison between standard deductions and post-sacrifice deductions, with clear identification of total savings.
The tax savings from salary sacrifice arise because your contractual salary is reduced before tax is calculated. HMRC treats the lower figure as your earnings for income tax and Class 1 NI purposes, resulting in dual savings.
Annual Tax Savings from Salary Sacrifice
| Salary | Annual Sacrifice | Tax Saved | NI Saved | Total Saved |
|---|---|---|---|---|
| £25,000 | £1,200 | £240 | £96 | £336/year |
| £32,000 | £2,400 | £480 | £192 | £672/year |
| £45,000 | £3,600 | £1,440 | £72 | £1,512/year |
| £55,000 | £6,000 | £2,400 | £120 | £2,520/year |
The jump in savings at £45,000+ occurs because the sacrifice falls within the higher rate band (40% tax). Strategic sacrifice to bring earnings below £50,270 maximises Basic Rate retention.
Salary Sacrifice and Pension Growth
The most powerful application of salary sacrifice is pension contributions. When you sacrifice £200/month into your pension, your actual cost is only £144 (basic rate) while £200 goes into your pension pot. Over 20 years with 5% annual growth, that £144/month sacrifice builds a pot worth approximately £65,000 — yet your actual cash outlay was only £34,560.
For monthly breakdowns, use our monthly sacrifice calculator. For base salary calculations, try the pro rata calculator. To see your overall take-home pay after all deductions, use our net pay tool.
How to Use the Salary Sacrifice Tax Calculator
Using our salary sacrifice tax calculator is straightforward. Follow these steps to get accurate results for your situation:
- Enter your full-time salary — This is the annual salary for the equivalent full-time role, before any deductions. You'll find this on the job advert or your contract.
- Set the full-time hours — The standard working week for the role. Most UK employers use 37.5 or 40 hours per week.
- Enter your actual hours — Your contracted weekly hours. This is the number you actually work.
- Enter your sacrifice amount — The monthly or annual amount being sacrificed towards your pension, cycle-to-work, or other scheme.
- Click Calculate — The salary sacrifice tax calculator displays your results instantly, with annual, monthly, weekly, daily, and hourly breakdowns.
Worked Example: Salary Sacrifice Tax Calculator
Here's a practical example using the salary sacrifice tax calculator. Emma earns £35,000 and sacrifices £200/month into her employer's pension scheme.
Before sacrifice:
- Gross salary: £35,000 (£2,917/month)
- Income tax: £4,486/year — 20% on £22,430 (above £12,570 personal allowance)
- Employee NI: £2,702/year — 8% on £22,430 (above £12,570)
- Net annual pay: £27,812
After £200/month sacrifice:
- New gross salary: £32,600 (£2,717/month)
- Income tax: £4,006/year — saving £480/year
- Employee NI: £2,402/year — saving £300/year
- Net annual pay: £26,192
The actual cost of the £2,400 pension contribution is only £1,620 thanks to tax and NI savings. That's a 32.5% boost to your pension at no extra cost, making the salary sacrifice tax calculator an essential tool for anyone considering salary sacrifice.
Important Rules for Salary Sacrifice in the UK
- Your pay cannot fall below NMW: Salary sacrifice cannot reduce your cash pay below the National Minimum Wage. If it would, you can only sacrifice down to the NMW level.
- It reduces your pensionable pay: Your State Pension entitlement won't be affected (employers pay the difference), but your private pension base salary will be lower.
- Not all benefits qualify: Tax-efficient salary sacrifice only works for pensions, cycle-to-work, ultra-low emission cars, childcare vouchers (pre-2018 schemes), and a few other HMRC-approved benefits.
- Employer NI savings: Your employer also saves NI (13.8%) on the sacrificed amount. Many employers pass some of this saving to you as extra pension contributions — always ask.
For detailed rules, see HMRC's salary sacrifice guidance.
Pro Rata Holiday Entitlement
Under the Working Time Regulations 1998, all UK workers are entitled to a minimum of 5.6 weeks' paid holiday per year (28 days for full-time). If you work part-time, your entitlement is calculated pro rata based on your actual hours or days worked.
| Days Worked/Week | FTE Ratio | Statutory Days/Year | Bank Holidays (pro rata) |
|---|---|---|---|
| 5 days (full-time) | 1.0 | 28 days | 8 days |
| 4 days/week | 0.8 | 22.4 days | 6.4 days |
| 3 days/week | 0.6 | 16.8 days | 4.8 days |
| 2.5 days/week | 0.5 | 14 days | 4 days |
| 2 days/week | 0.4 | 11.2 days | 3.2 days |
Holiday entitlement is always rounded up — never down — when the result is not a whole number, per ACAS guidance on holiday entitlement. Bank holidays may be included in or added on top of your statutory 28 days, depending on your contract.
All calculations on this page follow ACAS pro rata pay guidelines and are consistent with the UK Employment Rights Act 1996. Tax figures use HMRC 2025/26 rates. The April 2025 National Living Wage of £12.21/hour is applied where relevant.
Related Salary Calculators
Our salary sacrifice tax calculator is just one of the tools available on ProRataCalculator. You may also find these useful: pro rata calculator, term-time salary calculator, overtime calculator.
Last updated: February 2026. Verified against HMRC 2025/26 tax rates and April 2025 National Living Wage (£12.21/hour).
Frequently Asked Questions
Salary sacrifice is an arrangement where you agree to reduce your gross salary in exchange for a non-cash benefit, most commonly pension contributions. This reduces your income tax and National Insurance.
You save income tax and NI on the sacrificed amount. For a basic rate taxpayer sacrificing £200/month: tax saving = £200 × 20% (tax) + £200 × 8% (NI) = £56/month.
With salary sacrifice pension schemes, your employer pays the contributions directly, so you save on NI. However, the sacrificed amount reduces your "reference salary" which may affect mortgage applications.
Yes. If your gross salary is just above a tax threshold, salary sacrifice can bring you below it. For example, sacrificing enough to drop below £50,270 would avoid the 40% higher rate tax band.