Salary Sacrifice Calculator UK: pension and electric car
See what giving up part of your salary for your pension or an electric car does to your tax, National Insurance and take-home pay, and what changes from April 2029.
- Official sources cited
- Last updated
- Free, no sign-up
Your details
Your employer pays what you give up into your pension. We show the tax and National Insurance you save.
Your pay before tax and National Insurance, before any salary sacrifice.
Your result
Tax and National Insurance saved a year
£560.00
| Step | Without sacrifice | With sacrifice | Change |
|---|---|---|---|
| Gross payYour salary, less the amount you give up | £40,000.00 | £38,000.00 | -£2,000.00 |
| Income taxOn the pay that is left | £5,486.00 | £5,086.00 | -£400.00 |
| National InsuranceOn the pay that is left | £2,194.40 | £2,034.40 | -£160.00 |
| Take-home pay a yearGross pay − tax − National Insurance − loans | £32,319.60 | £30,879.60 | -£1,440.00 |
- Goes into your pension a year
- £2,000.00
- Your take-home pay falls by
- £120.00 a month
- More take-home pay than a net pay pension
- £160.00 a year
- Your employer saves in National Insurance
- £300.00 a year
Based on giving up £2,000.00 of a £40,000.00 salary a year, 2026 to 2027 tax year, England and Northern Ireland rates, standard tax code and National Insurance category A. An estimate: your payslip can differ by a few pounds.
How to use this calculator
- Choose pension or electric car, then enter your gross salary and what you give up: for a pension a share of your salary or an amount a month or a year, for a car its list price and the monthly amount.
- Choose where you live. Open More options for a student loan, a postgraduate loan, or if your employer adds its own National Insurance saving to your pension.
- For a pension, switch on the April 2029 rules to see what happens when only the first £2,000 a year stays free of National Insurance.
How salary sacrifice works out
With salary sacrifice you agree to a lower gross salary, and your employer pays the same amount into your pension. Because your pay is lower, income tax and National Insurance are worked out on less. The whole amount you gave up goes into your pension (GOV.UK).
We work out your take-home pay twice, with your full salary and with the lower one, using the same tax, National Insurance and student loan rules as our Take-Home Pay calculator. The difference is what you save. We also compare it with a normal "net pay" pension of the same size, which saves income tax but not National Insurance.
- Pay after sacrifice = salary − amount you give up
- Income tax and National Insurance are worked out on the pay that is left
- Your pension gets the whole amount you gave up (plus any National Insurance saving your employer adds)
- Take-home pay falls by the amount you give up, minus the tax and National Insurance you save
Worked examples
£40,000 salary, 5% into your pension
Giving up £2,000 a year saves £560 in tax and National Insurance.
Tax and National Insurance saved a year
£560.00
| Step | Without sacrifice | With sacrifice | Change |
|---|---|---|---|
| Gross payYour salary, less the amount you give up | £40,000.00 | £38,000.00 | -£2,000.00 |
| Income taxOn the pay that is left | £5,486.00 | £5,086.00 | -£400.00 |
| National InsuranceOn the pay that is left | £2,194.40 | £2,034.40 | -£160.00 |
| Take-home pay a yearGross pay − tax − National Insurance − loans | £32,319.60 | £30,879.60 | -£1,440.00 |
£40,000 salary, £250 a month
Giving up £3,000 a year saves £840, so take-home pay falls by £2,160.
Tax and National Insurance saved a year
£840.00
| Step | Without sacrifice | With sacrifice | Change |
|---|---|---|---|
| Gross payYour salary, less the amount you give up | £40,000.00 | £37,000.00 | -£3,000.00 |
| Income taxOn the pay that is left | £5,486.00 | £4,886.00 | -£600.00 |
| National InsuranceOn the pay that is left | £2,194.40 | £1,954.40 | -£240.00 |
| Take-home pay a yearGross pay − tax − National Insurance − loans | £32,319.60 | £30,159.60 | -£2,160.00 |
£500 a month for a £45,000 electric car
On a £40,000 salary in 2026 to 2027: the car benefit is £1,800 and your take-home pay falls by £390 a month.
Your take-home pay falls by
£390.00 a month
| Step | Without sacrifice | With sacrifice | Change |
|---|---|---|---|
| Gross payYour salary, less the amount you give up (cash pay) | £40,000.00 | £34,000.00 | -£6,000.00 |
| Income taxOn the pay that is left plus the car benefit | £5,486.00 | £4,646.00 | -£840.00 |
| National InsuranceOn the pay that is left (not on the car benefit) | £2,194.40 | £1,714.40 | -£480.00 |
| Take-home pay a yearGross pay − tax − National Insurance − loans | £32,319.60 | £27,639.60 | -£4,680.00 |
£60,000 salary, 10% into your pension
A higher rate taxpayer: £6,000 into the pension for £3,480 of take-home pay.
Tax and National Insurance saved a year
£2,520.00
| Step | Without sacrifice | With sacrifice | Change |
|---|---|---|---|
| Gross payYour salary, less the amount you give up | £60,000.00 | £54,000.00 | -£6,000.00 |
| Income taxOn the pay that is left | £11,432.00 | £9,032.00 | -£2,400.00 |
| National InsuranceOn the pay that is left | £3,210.60 | £3,090.60 | -£120.00 |
| Take-home pay a yearGross pay − tax − National Insurance − loans | £45,357.40 | £41,877.40 | -£3,480.00 |
What you save
What you save depends on the tax band your sacrificed pay would have been taxed in. Giving up £3,000 a year from a £40,000 salary saves £600 in income tax (20%) and £240 in National Insurance (8%), so £840 in all. Your take-home pay falls by £2,160, which is 72p for every £1 that goes into your pension.
A higher rate taxpayer saves more. Giving up £6,000 from a £60,000 salary saves £2,400 in income tax (40%) and £120 in National Insurance (2%, because this pay is above the upper earnings limit), so each £1 into your pension costs 58p of take-home pay.
If you have a student loan, your repayments are worked out on the same pay as National Insurance, so a lower salary means lower repayments. That is a smaller repayment rather than extra cash, so we show it separately.
Salary sacrifice, net pay and relief at source
Most workplace pensions take your contribution before tax ("net pay"), which saves income tax but still charges National Insurance on your full pay. Salary sacrifice saves both. On a £40,000 salary, giving up £3,000 leaves you £240 better off a year than a £3,000 net pay contribution, the 8% National Insurance on £3,000.
With "relief at source", used by many personal pensions, you pay from your take-home pay and the pension provider adds basic rate tax relief. That is a different arrangement from salary sacrifice, and our Take-Home Pay calculator covers it.
What changes in April 2029
From 6 April 2029 the amount of employee pension contributions made through salary sacrifice that is free of National Insurance is capped at £2,000 a year (GOV.UK). Anything above £2,000 is charged National Insurance as if you had not given it up. Income tax relief is not affected.
On a £40,000 salary, giving up £5,000 saves £400 in National Insurance today but £160 from April 2029, because only £2,000 of it is exempt. The income tax saving stays £1,000. Rates for 2029 to 2030 have not been published, so the calculator uses this year's rates as a stand-in when you switch the 2029 rules on.
Your employer's National Insurance saving
Your employer also pays less National Insurance, at 15% on pay above £5,000 a year in 2026 to 2027 (GOV.UK). On £3,000 that is £450 a year. Some employers pay all or part of that saving into your pension, often called a "SMART" scheme, but they do not have to. Enter the share your employer adds under More options to see your pension grow.
Electric car salary sacrifice
With an electric car scheme you give up part of your gross pay each month and your employer provides the car. For a car with no CO2 emissions the car is a taxable benefit in kind worth a percentage of its list price, not the salary you give up (HMRC guide). The percentage is 4% in 2026 to 2027 and 5% in 2027 to 2028; the government has announced 7% for 2028 to 2029 and 9% for 2029 to 2030.
A £45,000 car in 2026 to 2027 has a benefit of £1,800 a year (4%), which is taxed as income: £360 at the basic rate and £720 at the higher rate. HMRC rounds the benefit down to whole pounds, so a £33,333 car at 4% is £1,333, not £1,333.32. You pay no National Insurance on the benefit; your employer pays Class 1A National Insurance at 15%, which is £270 on £1,800.
What you save is the tax and National Insurance on the pay you give up, less the income tax on the benefit. On a £40,000 salary, giving up £500 a month (£6,000 a year) for a £45,000 electric car saves £840 in income tax and £480 in National Insurance, and your take-home pay falls by £390 a month, 78p for every £1 you give up. Your employer's scheme may include insurance and servicing in the monthly amount, so enter the whole amount.
What to check before you sacrifice salary
Salary sacrifice must not take your cash pay below the National Minimum Wage. It can also lower statutory pay such as maternity or sick pay, and some state benefits, because they depend on your earnings. Your employer decides whether pension contributions and pay rises use your reduced salary or your original one. Ask your employer, and see the HMRC guide.
This calculator covers pension salary sacrifice and fully electric cars. Other schemes work differently: apart from pensions, workplace nurseries and cycle to work, the usual tax exemptions do not apply when a benefit is paid for by salary sacrifice.
Frequently asked questions
How much will I save with salary sacrifice?
It depends on your tax band. On a £40,000 salary, giving up £3,000 a year saves £840: £600 in income tax and £240 in National Insurance. Your take-home pay falls by £2,160, so each £1 in your pension costs 72p.
Is salary sacrifice worth it?
For the tax and National Insurance you save, usually yes: a basic rate taxpayer saves 28p in every £1 given up (20% tax and 8% National Insurance) and a higher rate taxpayer 42p (40% tax and 2% National Insurance). Check that it does not take your pay below the minimum wage or lower benefits that depend on your earnings.
What is the difference between salary sacrifice and a net pay pension?
Net pay takes your contribution before income tax, so it saves tax but not National Insurance. Salary sacrifice saves both. On a £40,000 salary, giving up £3,000 leaves you £240 a year better off than paying £3,000 into a net pay pension.
What is changing for pension salary sacrifice in April 2029?
From 6 April 2029 only the first £2,000 a year of employee pension salary sacrifice stays free of National Insurance, and anything above is charged as if you had not given it up. On a £40,000 salary, a £5,000 sacrifice saves £400 in National Insurance today but £160 from April 2029. Income tax relief is not affected. See GOV.UK.
How much National Insurance does my employer save?
Employer National Insurance is 15% on pay above £5,000 a year in 2026 to 2027, so giving up £3,000 saves your employer £450. Whether any of it goes into your pension is up to your employer.
Does salary sacrifice lower my student loan repayments?
Yes. Student loan repayments use the same pay as National Insurance, so a lower salary means lower repayments. On a £40,000 salary with a Plan 2 loan, giving up £3,000 lowers your repayments by £270 a year. That is a smaller repayment, not extra take-home pay.
Can salary sacrifice take my pay below the minimum wage?
No. A salary sacrifice arrangement must not reduce your cash earnings below the National Minimum Wage. See GOV.UK.
Does salary sacrifice affect maternity pay or state benefits?
It can. A lower salary can reduce statutory pay, such as maternity pay or sick pay, and some earnings-related or contribution-based state benefits. Ask your employer how your scheme affects them.
What is SMART salary sacrifice?
A scheme where the National Insurance you save is paid into your pension instead of staying in your pay, so your take-home pay stays about the same while your pension grows. Employers may also add their own saving. They do not have to, and not every employer offers salary sacrifice.
How is an electric car salary sacrifice taxed?
For a car with no CO2 emissions you are taxed on a benefit in kind: the list price times a percentage that is 4% in 2026 to 2027. On a £45,000 car that is £1,800 a year, which costs £360 in income tax at the basic rate and £720 at the higher rate. There is no National Insurance on the benefit for you, and your employer pays Class 1A National Insurance (£270).
What does a £500 a month electric car cost after tax?
On a £40,000 salary with a £45,000 car in 2026 to 2027, giving up £500 a month (£6,000 a year) saves £840 in income tax (after the tax on the car benefit) and £480 in National Insurance. Your take-home pay falls by £390 a month, which is 78p for every £1 you give up.
What is the electric car benefit in kind rate?
The percentage of the list price that is taxed: 4% in 2026 to 2027 and 5% in 2027 to 2028. It is announced to rise by 2 points a year to 7% in 2028 to 2029 and 9% in 2029 to 2030. See GOV.UK.
What is the P11D value of a car?
The car's list price from the manufacturer, including options, delivery charges and VAT. It is not the price you pay or the lease cost. Your employer or the scheme provider can tell you the figure, and it decides the benefit in kind.
Does the calculator cover hybrid or petrol cars, or cycle to work?
No. It covers pensions and fully electric cars. Hybrid and petrol cars have other rules, such as the higher of the salary given up and the benefit charge, and cycle to work has its own exemption.
Sources
- GOV.UK: Salary sacrifice for employers
How salary sacrifice works, the National Minimum Wage limit, and that a sacrificed amount paid into a pension has no tax or National Insurance charge to the employee.
- GOV.UK: Changes to salary sacrifice for pensions from April 2029
From April 2029 the amount exempt from National Insurance is capped at £2,000 a year for employee contributions made through salary sacrifice.
- GOV.UK: Salary sacrifice reform for pension contributions, effective from 6 April 2029
The measure takes effect from 6 April 2029.
- GOV.UK: Rates and thresholds for employers 2026 to 2027
Employer National Insurance: 15% above the £5,000 secondary threshold.
- GOV.UK: Company car tax rates (CO2 emissions tables of rates)
The percentage of the list price taxed as a benefit for a car with no CO2 emissions: 4% in 2026 to 2027 and 5% in 2027 to 2028.
- GOV.UK: Income Tax: Company car tax rates 2028 to 2030
The percentage for electric cars rises 2 points a year in 2028 to 2029 and 2029 to 2030, to 9%.
- GOV.UK: Work out company car and fuel benefit (HMRC)
HMRC's own tool, which our car benefit matches (including rounding down to whole pounds).
- GOV.UK: Income Tax rates and Personal Allowances
Income tax bands and the Personal Allowance (the same figures as our Take-Home Pay calculator).
This is an estimate for guidance only, not financial or legal advice.
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