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. Common examples include pension contributions, company cars, or childcare vouchers.

2. How the Calculator Works

The calculator uses the following formula:

Where:

• Gross Pay — Your total annual salary before deductions
• Income Tax — Calculated using 2024-25 UK tax brackets
• National Insurance — Calculated using 2024-25 NI rates
• Salary Sacrifice — Amount sacrificed for benefits

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can reduce your taxable income, potentially lowering your income tax and National Insurance contributions while providing valuable benefits.

4. Using the Calculator

Tips: Enter your gross annual salary and any salary sacrifice amount. The calculator will show your estimated income tax, National Insurance, and net pay.

5. Frequently Asked Questions (FAQ)

Q1: What can I use salary sacrifice for?
A: Common uses include pension contributions, cycle-to-work schemes, childcare vouchers, and company cars.

Q2: Does salary sacrifice affect my pension?
A: It can increase your pension contributions as the sacrificed amount is typically added to your pension before tax.

Q3: Are there limits to salary sacrifice?
A: Yes, your pay after sacrifice must not fall below the National Minimum Wage.

Q4: How does this affect my take-home pay?
A: While your cash pay decreases, you gain non-cash benefits and potentially pay less tax/NI.

Q5: Is salary sacrifice right for me?
A: This depends on your circumstances. Consult a financial advisor for personalized advice.