Salary sacrifice calculator
Work out what giving up some of your pay really costs you, once you pay less tax and National Insurance.
2026 to 2027 rates from HMRC, checked 13 November 2026.
Result
Giving up £2,000.00 a year costs you £1,440.00 of take-home pay, £120.00 a month, because you pay less tax and National Insurance.
less take-home pay a month, 2026 to 2027
| Pay given up | £2,000.00 |
|---|---|
| Income Tax saved | £400.00 |
| National Insurance saved | £160.00 |
| Cost to your take-home pay | £1,440.00 |
| Take-home a month, before | £2,693.45 |
| Take-home a month, after | £2,573.45 |
Each pound you give up costs you 72p. Your employer saves £300.00 a year in National Insurance.
Show the workings
| Step | Sum | Answer |
|---|---|---|
| Take-home pay without the sacrifice | on £40,000.00 | £32,321.40 |
| Take-home pay with it | on £40,000.00 − £2,000.00 = £38,000.00 | £30,881.40 |
| Cost to you | £32,321.40 − £30,881.40 | £1,440.00 |
| Employer National Insurance saved | £2,000.00 less pay above £5,000.00 × 15% | £300.00 |
What this leaves out or assumes
- England, Wales and Northern Ireland Income Tax rates, a standard Personal Allowance and National Insurance category A.
- Tax-free pay follows the tax code, as payroll and HMRC's own take-home pay estimator do: code 1257L gives £12,579 a year, not £12,570, which is up to a few pounds less tax.
- Worked out over the whole tax year. Payroll works out each payday on its own, so a monthly or weekly payslip can differ by a few pence, or by more in a month with a bonus.
- Salary sacrifice cannot take your pay below the National Minimum Wage, and lower pay can mean lower statutory payments such as maternity pay. GOV.UK explains salary sacrifice.
Where the figures come from
- Personal Allowance, 2026 to 2027: £12,570 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Range of allowances each tax code number covers: £10. Source: HMRC PAYE Manual PAYE11065: suffix codes, calculating the number. Checked 13 November 2026.
- Basic rate of Income Tax (England, Wales and Northern Ireland): 20%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Basic rate band: taxable income it covers (England, Wales and Northern Ireland): £37,700 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Higher rate of Income Tax (England, Wales and Northern Ireland): 40%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Taxable income above which the additional rate applies (England, Wales and Northern Ireland): £125,140 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Additional rate of Income Tax (England, Wales and Northern Ireland): 45%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- National Insurance primary threshold: £12,570 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- National Insurance upper earnings limit: £50,270 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employee National Insurance between the primary threshold and upper earnings limit (category A): 8%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employee National Insurance above the upper earnings limit (category A): 2%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employer National Insurance secondary threshold: £5,000 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employer National Insurance above the secondary threshold (category A): 15%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
What salary sacrifice costs
| Salary and amount given up | Cost to take-home pay | Each pound costs |
|---|---|---|
| £1,250 on £25,000 | £900.00 | 72p |
| £2,000 on £40,000 | £1,440.00 | 72p |
| £3,000 on £60,000 | £1,740.00 | 58p |
| £10,000 on £110,000 | £3,800.00 | 38p |
How salary sacrifice works
You agree with your employer to give up some pay in return for a benefit, such as a bigger pension contribution, an electric car or a bike. Because your pay is lower, you pay less Income Tax and National Insurance on it, and that can make the benefit cost you less than the pay you give up. Your employer pays less National Insurance too, and some add part of that saving to your pension.
An electric car is different: it is a benefit in kind, so you pay Income Tax on a share of its list price. For a zero-emission car that share is 4% in 2026 to 2027, from HMRC's appropriate percentages. The calculator adds that tax to the cost, and says so if the car does not cost you less than the pay you give up.
It cannot take your pay below the National Minimum Wage. HMRC explains salary sacrifice. This calculator gives information, not advice.