1. What is Salary Sacrifice Pension?

Salary sacrifice is an arrangement where an employee gives up part of their salary in exchange for pension contributions from their employer. This can result in tax and National Insurance savings.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Pay — Annual salary before deductions
• Income Tax — Estimated annual income tax
• National Insurance — Estimated annual NI contributions
• Pension Sacrifice — Annual amount sacrificed to pension

Explanation: The calculation shows your take-home pay after accounting for pension contributions made through salary sacrifice.

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can reduce your income tax and National Insurance contributions, while increasing your pension pot. Both you and your employer may pay less National Insurance.

4. Using the Calculator

Tips: Enter all amounts in GBP. The calculator assumes all inputs are annual figures and divides by 12 to get monthly net pay.

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice right for everyone?
A: Not always. It may affect mortgage applications, maternity pay, or other benefits tied to your salary.

Q2: Are there limits to salary sacrifice?
A: Yes. Your reduced salary must not fall below the National Minimum Wage, and there may be annual allowance limits for pension contributions.

Q3: How does this affect my tax code?
A: Your tax code may change as your taxable income is reduced by the sacrificed amount.

Q4: Can I change or stop my salary sacrifice?
A: Typically yes, but only at certain times (like annual benefits renewal) unless you have a life event that qualifies for a mid-year change.

Q5: Does this affect employer pension contributions?
A: It depends on your scheme. Some employers may contribute more when you use salary sacrifice.