1. What is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee gives up part of their salary in exchange for non-cash benefits. This can reduce income tax and National Insurance contributions for both employee and employer.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Pay — Total salary before any deductions
• Income Tax — Amount deducted for income tax
• National Insurance — Amount deducted for NI contributions
• Salary Sacrifice — Amount sacrificed for benefits

Explanation: The calculation shows your take-home pay after all deductions including any salary sacrifice arrangements.

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can provide tax efficiencies, lower National Insurance contributions, and access to benefits like pension contributions, childcare vouchers, or cycle-to-work schemes.

4. Using the Calculator

Tips: Enter your gross annual salary, estimated income tax, National Insurance contributions, and the amount you wish to sacrifice. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What benefits can I get through salary sacrifice?
A: Common benefits include pension contributions, childcare vouchers, cycle-to-work schemes, and ultra-low emission vehicles.

Q2: Does salary sacrifice affect my pension?
A: It may affect calculations based on your salary, so check with your pension provider. Many employers adjust pension contributions to account for this.

Q3: Are there minimum wage considerations?
A: Yes, your pay after salary sacrifice cannot take you below the National Minimum Wage or National Living Wage.

Q4: Can I change or cancel my salary sacrifice?
A: Typically only during certain windows or with life events (like marriage or childbirth), check your employer's policy.

Q5: Is salary sacrifice right for everyone?
A: It depends on individual circumstances. Those close to tax thresholds or receiving certain benefits should seek advice.