Salary Sacrifice Calculator
See how much tax and NI you save when you sacrifice part of your salary for pension, cycle to work, or an electric car.
How Does Salary Sacrifice Work?
Salary sacrifice is an arrangement where you agree to give up part of your gross salary in exchange for a non-cash benefit. Because the sacrifice comes off your gross pay before tax, you save on both income tax and National Insurance contributions.
Common Salary Sacrifice Schemes
Pension contributions are the most common. Your employer pays the sacrificed amount directly into your pension, saving you tax and NI. Cycle to Work lets you get a bike and accessories tax-free. Electric car schemes (like Octopus Electric Vehicles) offer ultra-low BIK rates of just 2% in 2025/26.
Is Salary Sacrifice Worth It?
For most people, yes. A basic-rate taxpayer saves around 32% (20% tax + 12% NI) on their sacrifice amount. Higher-rate taxpayers save around 42%. The only downside is that it reduces your gross pay on paper, which can affect mortgage applications and statutory benefits like maternity pay.
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