Salary Sacrifice Calculator
Estimate your monthly tax and National Insurance savings when exchanging part of your salary for benefits like pensions, cycle-to-work, or electric vehicles.
Calculate Your Take-Home Savings
Enter your gross salary and proposed monthly sacrifice amount to instantly see how much you save on Income Tax and National Insurance.
Salary & Sacrifice Details
See the real cost of your benefits after tax relief.
How it Works
Understanding salary sacrifice mechanics
Agree on a Sacrifice
You and your employer agree to reduce your contractual cash salary by a fixed monthly amount in exchange for a specific benefit.
Lower Taxable Income
Because the sacrifice is taken from your gross pay before payroll runs, your official taxable income is reduced.
Pay Less Tax & NI
You pay less Income Tax and less Employee National Insurance Contributions (NICs) on the sacrificed amount.
Enjoy the Benefit
You receive the full value of the benefit (e.g., £200 into your pension), but your take-home pay only drops by the post-tax equivalent (e.g., £120).
Popular Salary Sacrifice Schemes
A general overview of common benefits offered through salary sacrifice and their typical tax treatment in the UK.
| Scheme Type | Typical Benefit | Tax & NI Savings? |
|---|---|---|
| Workplace Pension | Retirement savings | Yes (Income Tax & Employee NI) |
| Cycle to Work | Bicycles & safety equipment | Yes (Income Tax & Employee NI) |
| Electric Vehicle (EV) | Company car leasing | Yes (Income Tax & Employee NI, plus low 2% BIK) |
| TechScheme | Laptops, phones, tablets | Yes (Income Tax & Employee NI) |
| Critical Illness Cover | Enhanced insurance policies | Yes (Income Tax & Employee NI) |
Salary Sacrifice FAQ
Answers to the most frequently asked questions about salary exchange schemes and their impact on your finances in the UK.
Salary sacrifice is an arrangement between an employer and an employee where the employee agrees to give up a portion of their pre-tax salary in exchange for a non-cash benefit, such as additional pension contributions, a cycle-to-work scheme, or an electric vehicle. Because the sacrificed amount is taken before tax and National Insurance are calculated, it reduces your taxable income.
By reducing your gross salary, you pay less Income Tax and less Employee National Insurance Contributions (NICs). For example, a higher-rate taxpayer sacrificing £100 per month into a pension only sees their take-home pay reduce by around £58, meaning the ‘real’ cost of the £100 benefit is significantly lower.
Potentially, yes. Mortgage lenders typically assess affordability based on your post-sacrifice (lower) gross income. However, some lenders may add back pension contributions when calculating your income. It is always advisable to speak with a mortgage broker before entering into a new salary sacrifice arrangement.
The most popular schemes include workplace pensions (auto-enrolment or additional contributions), Cycle to Work schemes, Electric Vehicle (EV) car leasing, and technology schemes (laptops, phones, and tablets). Some employers also offer childcare vouchers or critical illness cover through salary sacrifice.