Salary Sacrifice Calculator

Just enter the number of employees on your payroll, along with your employee's average salary. The calculator uses a standard value of 5% salary sacrifice to calculate the savings your organisation and its employees can make by reducing National Insurance contributions.

Salary sacrifice is a UK government-approved tax hack that helps your employees save for the future by putting more income in their pension each month, without paying National Insurance contributions on these funds.

Salary sacrifice is a UK government scheme which helps employers and employees save on tax. An employee agrees with their employer to sacrifice part of their salary in exchange for non-cash benefits, including increased pension contributions from their employer

The employee's gross salary is reduced by the amount they sacrifice, resulting in reduced National Insurance contributions (NICs) for both the employee and employer. Employers can set up a salary sacrifice arrangement by changing the terms of an employee’s employment contract.

Despite offering a simple way to cut down tax bills and help employees keep more of their gross salary, only 41% of SMEs offer salary sacrifice.

Salary sacrifice adds more funds to your pension. This increases the tax-free contributions made by your employer and helps your compound interest grow over time. If your pension makes money one year, there is more money the next year to make even more investments, and so on. Einstein called compounding the most powerful force in the universe, so we call this "Einstein Money"!

Let's look at this from an employee's perspective and an employer's perspective.

Meet Rachel, who earns £50k per year

• She currently pays 5% of her earnings into a workplace pension scheme. Her employer adds a further 3%, so her total yearly pension contribution is £4k per year.
• Rachel agrees to a 5% salary reduction with her employer. This works out at £2.5k, the the same amount she was contributing annually to her pension.
• Her employer pays that £2.5k into the pension scheme. Her salary is now £47.5k. This is her salary sacrifice.
• Because she is earning less money, she pays less tax, so her take-home pay increases by £300 per year.

Meet Bauble, a B2C tech startup that helps people turn unloved jewellery into cash

• Bauble recently took on their 100th employee and their annual salary bill is £5m. This means they pay National Insurance of £564k each year.
• To help employees take home more of their income, Bauble offer salary sacrifice
• If every employee took them up on 5% salary sacrifice their National Insurance bill is reduced to £530k
• Bauble stands to save up to £34.5k each year by introducing salary sacrifice

Most employees that opt for salary sacrifice contribute 5% of their gross income to their pension. That's why our calculator defaults to this value.

We love hearing from business leaders interested in exploring how they can introduce salary sacrifice with their teams, and we can help with that too. We’ve been launching salary sacrifice schemes since 2019, and can help you understand the savings to you and your employees with a free phone consultation with one of our pension experts.