Salary Sacrifice Calculator

Calculate how much you and your employer can save through salary sacrifice arrangements for pensions, electric vehicles, and other benefits.

Your Details
£
%
Current employee pension contribution
Standard code is 1257L
Salary Sacrifice Options
% of salary
£
Understanding Salary Sacrifice
What is Salary Sacrifice?

Salary sacrifice (also called salary exchange) is an arrangement where you give up part of your salary in exchange for a non-cash benefit. Because your gross salary is reduced, you pay less Income Tax and National Insurance.

How Does It Work?
  1. You agree to reduce your contractual salary
  2. Your employer provides a benefit worth the sacrificed amount
  3. You pay less tax and NI on your reduced salary
  4. Your employer also saves on employer's NI (15%)
Common Salary Sacrifice Benefits
  • Pension contributions: Very popular - saves both tax and NI
  • Electric vehicles: Extremely tax-efficient due to low BIK rates
  • Cycle to Work: Save 32-47% on bikes and equipment
  • Technology schemes: Phones, laptops, home office equipment
Important Considerations
  • Salary sacrifice reduces your "relevant earnings" for mortgage applications
  • May affect statutory benefits (maternity pay, redundancy)
  • Cannot sacrifice below National Minimum Wage
  • Some student loan calculations use reduced salary
Tax & NI Rates 2026/27
Income Tax
Personal Allowance £12,570
Basic rate (20%) to £50,270
Higher rate (40%) to £125,140
Additional rate (45%) over £125,140
National Insurance
Employee NI 8%
Above £50,270 2%
Employer NI 15%
EV BIK Rates
2025/26 3%
2026/27 4%
2027/28 5%

Pure electric vehicles only. Hybrids have higher rates.

Salary Sacrifice Tips
  • Higher earners save more (40-45% tax)
  • EV schemes are extremely tax-efficient
  • Pension sacrifice can help avoid child benefit tax
  • Ask if employer passes on NI savings
  • Check impact on mortgage affordability
  • Consider timing around pay rises
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