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 deductions
• \( Income\ Tax \) — Amount deducted for income tax
• \( National\ Insurance \) — Amount deducted for NI
• \( Salary\ Sacrifice \) — 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 reduce your taxable income, potentially lowering your tax band and increasing your take-home pay for certain benefits like pensions, childcare vouchers, or cycle-to-work schemes.

4. Using the Calculator

Tips: Enter all amounts in GBP. For accurate results, use your actual tax and NI figures from your payslip or tax code notice.

5. Frequently Asked Questions (FAQ)

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

Q2: Does salary sacrifice affect my pension?
A: It can actually boost your pension if you sacrifice salary into your pension pot, as you pay less tax and NI.

Q3: Are there any downsides to salary sacrifice?
A: It may affect mortgage applications (as it reduces gross salary) and some state benefits that are based on earnings.

Q4: How much can I sacrifice?
A: There's no legal limit, but your pay can't fall below the National Minimum Wage after sacrifice.

Q5: Can I opt out of salary sacrifice?
A: Most schemes allow you to opt out during certain periods, but check your employer's policy.