Salary sacrifice trades take-home for pension. The trade is not 1:1 - you skip income tax AND National Insurance. Worked out properly using 2025/26 UK rates.
England, Wales and NI bands apply. Scottish bands differ - Scottish version coming.
How much you would sacrifice into pension each year, on top of any current contribution.
Your employer saves 15% NI on the sacrificed slice. Many pass some or all back into your pension.
How long until you draw on it, and the real return assumed on the invested balance.
Higher rate (40%)
Higher-rate band: salary sacrifice avoids 40% tax and 2% NI immediately, plus the employer rebate flows back into pension. SIPP would need a tax-return reclaim to recover the higher-rate slice - sacrifice does it cleanly at source.
England/Wales/NI 2025/26 bands. PA £12,570 (tapered above £100k), basic rate 20% to £37,700 of taxable income, higher rate 40% to £125,140, additional rate 45% above. NI 8% (£12,570 to £50,270) then 2% above. Employer NI 15% above £5,000 secondary threshold. SIPP comparison uses relief-at-source: 80p net for basic-rate, 60p for higher-rate, 40p in the PA taper band (after higher-rate top-up), 55p for additional-rate. Not advice.
Worth runs this maths against your real salary, your employer's actual rebate policy, and the rest of your tax position. Join the waitlist.
Almost always, if your employer offers it. SIPP via relief-at-source recovers your income tax (20% basic, then 20% more via tax return for higher-rate). It does not recover NI. Salary sacrifice recovers both, and often gets you the employer NI rebate on top. The exception is if salary sacrifice would push you below the National Minimum Wage - illegal, and your employer will refuse to process.
Sometimes. Lenders look at gross salary on payslips, and salary sacrifice reduces it. Some lenders gross up the sacrifice contribution back to total comp; many do not. If you are applying for a mortgage in the next six to twelve months, talk to a broker first - sometimes worth pausing sacrifice for a few months around the application window.
Salary sacrifice reduces the salary that NI is paid on. As long as post-sacrifice salary is above the Lower Earnings Limit (£6,396 a year in 2025/26), you still earn a qualifying year of state pension. For most professionals this is not an issue; if you are sacrificing very aggressively, double-check.
Yes, and it is often even more valuable. Bonuses are taxed at your top marginal rate plus full NI. Sacrificing into pension saves the lot. The Bonus Sacrifice UK calculator handles that case specifically.