People in office

Salary sacrifice

You might be able to pay lower National Insurance Contributions while boosting either your pension contributions or your net salary.

What is a salary sacrifice?

Salary sacrifice means giving up part of your salary in return for a tax or National Insurance benefit. The benefit can be a pension contribution. If it is, your employer pays it directly into your pension pot on top of their normal contribution.

You can sacrifice your salary in two ways, either through a simple salary sacrifice or ‘SMART’ (Save More And Reduce Tax). Both mean that you and your employer pay less National Insurance.

Simple salary sacrifice and SMART salary sacrifice

Simple salary sacrifice

You agree with your employer that you’ll give up a fixed amount of your salary, to be paid into your pension. As you’re effectively earning a lower salary,  both you and your employer pay lower National Insurance contributions. The amount you save in National Insurance is shown in your take-home pay (net salary) which means your take-home pay will increase.

SMART (Save more money into your pension and reduce tax)

SMART salary sacrifice is a way of paying pension contributions that increases the amount paid into your pension, without reducing take home pay.

For SMART salary sacrifice your take home pay remains the same. The money you save on National Insurance goes into your pension, increasing your contributions at no cost to yourself. Your employer may choose to put their National Insurance saving into your pension too, but they don’t have to.

Not all employers offer salary sacrifice, so check with your employer or visit your scheme website, you can find the link to your scheme website on any email or letter about your pension.

Read our guide to SMART salary sacrifice.

Salary sacrifice calculator

Use our calculator by using a percentage of your salary or fixed amount contributions.

he tax year figures in the Salary Sacrifice calculator are 2024/25 tax rates and National Insurance figures of April 2024.

Please check the important information below for the current assumptions.

Please read the important notes before proceeding to use this tool:

Important information

  • This tool is for illustrative purposes only. It is designed to estimate the savings that salary sacrifice can deliver for employees and their employer. It will not give exact figures. For personalised results please speak to a tax adviser or accountant.
  • The calculator operates on a ‘Net Pay Arrangement’ basis (it assumes that the employee’s regular contributions are taken from their salary before tax is deducted and passed to us along with any contribution the employer might make). Our tool currently doesn't operate on 'Relief at Source' schemes (your contributions are taken from your pay after your wages are taxed).
  • The calculator has been designed to reflect our current understanding of Salary Exchange and the latest Finance Act. Legislation is subject to change and users will need to be satisfied that the results reflect their own interpretation of all relevant rules.
  • Salary sacrifice cannot be used where it will take an employee’s pay below the national minimum wage. Employers must identify which employees will be taken below the national minimum wage if they intend to offer salary sacrifice and restrict the offer accordingly.
  • The calculator only uses UK tax rates and bands for the 2024/25 tax year. It's not suitable for use for Scottish taxpayers.


  • All contributions are paid to a defined contribution pension scheme operating the ‘Net pay arrangement’ method.
  • No employee is subject to the money purchase annual allowance or annual allowance charge.
  • Each employee has no additional income other than the salary entered.
  • Each employee has no additional pension contributions other than those relating to the current employment.
  • Salary received/pension contributions paid are distributed uniformly through the tax year.
  • The calculator will not consider a situation where employment has started or ceased during the year. It assumes the current salary and pension contributions will apply in full throughout the tax year.


The following restrictions apply

  • Total annual pension contributions (pre-salary exchange) cannot exceed the maximum annual allowance plus carry forward.
  • Salary sacrifice calculations cannot be guaranteed in the following cases:
    • If earnings (post-salary sacrifice) are below the National Insurance primary threshold of £12,570.
    • If earnings (post-salary sacrifice) are above the ‘threshold income’ limit for tapered personal allowance purposes (£200,000).

Calculators and tools

Use our calculators and tools to find out what income you might need in retirement and what your savings you could get you in income.

Retirement planning tool

Your online account

State Pension calculator

Women on phone

Need help?

Contact us

If you can't find the information you’re looking for online.

Automatic enrolment

 A useful guide to tell you how automatic enrolment works. 

Not yet saving

Find out more about a workplace pension and what it could mean to you.