Salary sacrifice calculator

Our salary sacrifice calculator is designed to help you estimate the financial benefits of entering into a salary sacrifice scheme.

Page written by Ian Hawkins. Last reviewed on May 30, 2025. Next review due April 6, 2026.

Please note the above information is estimated and will vary based on exact workforce take-up and salaries.

Your results

Annual company saving

£0

Average annual worker saving

£0

Includes £0 of additional pension contributions from NI reinvestment.

What is salary sacrifice?

Salary sacrifice is an arrangement between you and your employer where you agree to give up part of your gross (pre-tax) salary in exchange for a non-cash benefit. It’s commonly used for things like:

Pension contributions
Cycle to Work schemes
Company cars
Childcare vouchers (closed to new applicants since 2018)

How it works:

Instead of receiving the full salary, your employer puts the “sacrificed” amount directly towards the chosen benefit. Because the deduction happens before tax and National Insurance (NI) are calculated, you may pay less, boosting your overall take-home value.

Example:

If your salary is £40,000 and you sacrifice £2,000 for pension contributions:

Your new gross salary becomes £38,000
You pay tax and NI on £38,000 instead of £40,000
£2,000 goes straight into your pension

Benefits:

Tax efficiency: You pay less Income Tax and NI
Boost to pensions: Especially if your employer passes on their NI savings to your pension pot
Cost-effective access to benefits: Like bikes or electric vehicles

Things to consider:

It may affect your mortgage applications, as your official salary is reduced
It can impact state benefits or statutory pay (e.g. maternity or sick pay)
Your employer must ensure your salary doesn’t fall below National Minimum Wage after sacrifice

Written by

Ian Hawkins

Ian Hawkins is Head of Content at Swoop. As a freelance business journalist and filmmaker he has reported from Europe, Central and North America and Africa. His films and writing have appeared on BBC World, Reuters and CBS, and he has spoken at conferences on both sides of the Atlantic on subjects including data, cyber security, and entrepreneurialism.

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