Salary sacrifice pension examples — what the numbers look like.
Worked examples for common salary bands and scenarios, including basic-rate, higher-rate, £100k taper, bonus sacrifice, and employer NI pass-through.
- ▸Salary sacrifice changes the route into the pension: gross pay is reduced and the employer pays the sacrificed amount as an employer pension contribution.
- ▸For 2026/27, a basic-rate employee usually saves 20% income tax and 8% employee NI on the sacrificed slice; above the upper earnings limit, employee NI is normally 2%.
- ▸Employer NI is 15% for a standard category A employee above the secondary threshold. Some employers pass all or part of this saving into the pension; others keep it.
- ▸The £100k personal allowance taper can make a sacrifice much more powerful, but the calculation depends on adjusted net income and other pension contributions.
Assumptions used in these examples
The examples below are deliberately simple. They assume:
- England, Wales, or Northern Ireland income tax bands for 2026/27.
- Employee National Insurance category A.
- No student loan, postgraduate loan, benefit-in-kind, childcare, or Scottish tax adjustments.
- The sacrifice does not breach the annual allowance and does not reduce pay below National Minimum Wage.
- Employer NI saving is shown separately because employer pass-through is scheme-specific.
- Pension growth, investment risk, and future tax on withdrawals are not modelled.
For your own numbers, use the salary sacrifice calculator, pension tax relief calculator, and annual allowance checker.
Example 1: basic-rate employee
This example assumes a £40,000 salary and a £2,000 annual salary sacrifice.
| Item | Amount |
|---|---|
| Gross salary sacrificed | £2,000 |
| Income tax saved at 20% | £400 |
| Employee NI saved at 8% | £160 |
| Approx take-home pay reduction | £1,440 |
| Pension contribution before employer NI pass-through | £2,000 |
| Possible employer NI saving at 15% | £300 |
| Possible pension contribution if fully passed on | £2,300 |
The simple read: £2,000 goes into the pension, but take-home pay falls by about £1,440. If the employer passes on the full employer NI saving, the pension contribution could be £2,300.
Example 2: higher-rate employee
This example assumes a £75,000 salary and a £5,000 annual salary sacrifice.
| Item | Amount |
|---|---|
| Gross salary sacrificed | £5,000 |
| Income tax saved at 40% | £2,000 |
| Employee NI saved at 2% | £100 |
| Approx take-home pay reduction | £2,900 |
| Pension contribution before employer NI pass-through | £5,000 |
| Possible employer NI saving at 15% | £750 |
| Possible pension contribution if fully passed on | £5,750 |
For a higher-rate earner above the upper earnings limit, the employee NI saving is smaller than for a basic-rate earner, but the income-tax saving is larger. Salary sacrifice can also remove the need to claim higher-rate relief separately, because the contribution is made by reducing gross pay through payroll.
Example 3: £100k personal allowance taper
This example assumes a £115,000 salary and a £15,000 annual salary sacrifice, taking adjusted net income back towards £100,000.
| Item | Amount |
|---|---|
| Gross salary sacrificed | £15,000 |
| Income tax saved, including personal allowance effect | About £9,000 |
| Employee NI saved at 2% | £300 |
| Approx take-home pay reduction | About £5,700 |
| Pension contribution before employer NI pass-through | £15,000 |
| Possible employer NI saving at 15% | £2,250 |
| Possible pension contribution if fully passed on | £17,250 |
This is the most sensitive example. The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, so pension contributions can restore some or all of the allowance. The exact result depends on bonuses, benefits, other income, charitable giving, and existing pension contributions.
For deeper context, see the personal allowance taper guide, high-earner pension strategy, and sixty percent tax trap calculator.
Example 4: bonus sacrifice
This example assumes a £10,000 bonus that would otherwise fall in the higher-rate band.
| Item | Amount |
|---|---|
| Bonus sacrificed into pension | £10,000 |
| Income tax saved at 40% | £4,000 |
| Employee NI saved at 2% | £200 |
| Approx take-home pay not received | £5,800 |
| Pension contribution before employer NI pass-through | £10,000 |
| Possible employer NI saving at 15% | £1,500 |
| Possible pension contribution if fully passed on | £11,500 |
Bonus sacrifice can be simpler to model than changing monthly salary because the tax saving applies to a clearly defined payment. It still counts towards the annual allowance, and the employer must offer bonus exchange through payroll. See the bonus sacrifice pension guide and bonus sacrifice tax case.
What employer NI pass-through changes
Employer NI pass-through is the biggest moving part that does not appear on the employee's tax code. In 2026/27, the standard employer NI rate is 15% above the relevant threshold for a category A employee.
| Employer treatment | What happens on a £5,000 sacrifice |
|---|---|
| Employer keeps the NI saving | £5,000 goes into pension |
| Employer passes on 50% of NI saving | £5,375 goes into pension |
| Employer passes on 100% of NI saving | £5,750 goes into pension |
This is why two workers on the same salary can see different outcomes. The payslip tax saving may be identical, but the pension contribution depends on the employer's salary sacrifice policy.
Caveats that change the answer
Salary sacrifice is not only a tax calculation. The reduced contractual pay figure can matter for mortgages, statutory maternity pay, death-in-service cover, and some workplace benefits.
If a mortgage application is close, read salary sacrifice and mortgages. If family leave is possible, read salary sacrifice and maternity leave. If you are comparing contribution methods, read salary sacrifice vs relief at source.
- ▸For 2026/27, employee National Insurance for category A employees is 8% between the primary threshold and upper earnings limit, then 2% above that. [GOV.UK]
- ▸For 2026/27, the standard employer National Insurance rate is 15% above the secondary threshold for category A employees. [GOV.UK]
- ▸For 2026/27, the standard personal allowance is £12,570 and is reduced by £1 for every £2 of adjusted net income above £100,000. [GOV.UK]
- ▸The annual allowance is £60,000 for the current tax year, unless a lower allowance applies because of flexible access or high income. [GOV.UK]
- ▸From April 2029, only the first £2,000 a year of employee pension contributions made through salary sacrifice will be exempt from NICs. [GOV.UK]
- •These examples are educational and do not give a personal sacrifice amount.
- •Scottish income tax bands differ, although employee NI works on UK-wide rules.
- •Salary sacrifice cannot normally reduce pay below National Minimum Wage.
- •Large contributions can trigger annual allowance or tapered annual allowance issues.
- •From April 2029, salary sacrifice will still receive income-tax relief, but the NI benefit will be capped for employee pension sacrifice above £2,000 a year under the announced rules.
FAQ
Is salary sacrifice better for basic-rate taxpayers or higher-rate taxpayers?
Both can benefit, but the shape differs. Basic-rate taxpayers often get a larger employee NI saving on the sacrificed slice, while higher-rate taxpayers get larger income-tax relief.
Does salary sacrifice reduce adjusted net income?
Yes, because contractual gross salary is reduced. That is why it can matter for the personal allowance taper and High Income Child Benefit Charge.
Can I salary-sacrifice a bonus into a pension?
Only if your employer offers bonus sacrifice or bonus exchange through payroll. A personal pension contribution paid after receiving the bonus is not the same thing.
Does employer NI pass-through always happen?
No. Some employers pass on none, some pass on part, and some pass on all of the saving. The scheme or HR policy determines the answer.