Salary Sacrifice & Benefits Calculator
See exactly how much you save with each workplace benefit. Tax, NI, and effective cost.
Your tax rate: 20% | NI rate: 8%
Available Benefits
Pension
Additional pension contributions via salary sacrifice
Annual allowance £60,000. Employer also saves NI — many add this to your pension.
Electric Vehicle (EV)
Lease an EV through your employer — save up to 40%+
BIK rate just 2% for EVs in 2025/26. One of the most tax-efficient benefits available. Cannot reduce salary below NMW.
Cycle to Work
Get a bike and accessories tax-free
No upper limit on scheme value since 2019 (employer discretion). Typically 12-month sacrifice period. Save 32-47% depending on tax bracket.
Workplace Nursery
Employer-provided nursery places — completely tax and NI free
Must be workplace nursery (not childcare vouchers). No cap on value. One of the few unlimited tax-free benefits.
Tax-Free Childcare
Government tops up childcare costs — £2 for every £8 you pay
Not salary sacrifice — separate government scheme. Get up to £2,000/year per child (£4,000 if disabled). Cannot use alongside childcare vouchers.
Childcare Vouchers (Legacy)
Pre-2018 scheme — still available if you joined before Oct 2018
Closed to new joiners since Oct 2018. Basic rate: £243/month (£2,916/yr). Higher rate: £124/month. Additional rate: £110/month.
Technology Scheme
Laptops, phones, tablets via salary sacrifice
Equipment must be primarily for work use. Typical 12-36 month sacrifice period. Save 32-47% vs buying outright.
Gym / Wellness
Gym membership via salary sacrifice
NI saving only — still subject to income tax as a benefit in kind. Some employers offer corporate gym discounts instead.
Car Parking
Workplace parking via salary sacrifice
Must be at or near the workplace. Tax-free if provided by employer directly (not reimbursed).
Health Screening
Annual health check — one per year tax-free
One health screening or check-up per year is tax-exempt. Additional screenings are taxable as BIK.
Key Rules & Limitations
National Minimum Wage Floor
Salary sacrifice cannot reduce your cash pay below the National Minimum Wage (£12.21/hr for 23+ in 2025/26). Your employer must check this.
Impact on Benefits
Reduced salary may affect: mortgage affordability assessments, statutory maternity/paternity pay (based on actual pay), state pension credits, and student loan repayments. The effect on most people is small, but check before committing to large sacrifices.
Contract Changes
Salary sacrifice is a contractual change — you agree to a lower salary in exchange for the benefit. Most schemes run for 12 months minimum. You typically cannot opt out early unless there is a "life event" (marriage, new child, redundancy).
Pension Annual Allowance
Total pension contributions (yours + employer) cannot exceed £60,000/year or 100% of earnings (whichever is lower). Excess is taxed. You can carry forward unused allowance from the previous 3 years.
Other Legal Tax-Saving Avenues
- Marriage Allowance — transfer £1,260 of unused PA to your spouse (save £252/yr)
- Gift Aid — extends your basic rate band, saving higher/additional rate taxpayers extra
- EIS/SEIS — 30-50% income tax relief on qualifying startup investments
- VCT — 30% income tax relief, tax-free dividends and gains
- ISA — £20,000/yr tax-free savings/investments
- Carry-forward pension — use unused pension allowance from last 3 years
- Self-employed expenses — if applicable, claim allowable business expenses
About the Salary Sacrifice Calculator
Salary sacrifice is an arrangement where you agree to give up part of your gross salary in exchange for a non-cash benefit from your employer. Because the sacrificed amount never reaches you as pay, neither you nor your employer pay National Insurance on it, and your Income Tax bill is reduced. This makes salary sacrifice one of the most tax-efficient ways to receive benefits — particularly pensions, electric vehicles, and cycle-to-work schemes.
The savings can be significant. A higher-rate taxpayer sacrificing £500/month into their pension saves 40% Income Tax (£200) plus 2% employee NI (£10), while the employer saves 13.8% employer NI (£69). Many employers pass some or all of their NI saving back into your pension, boosting your retirement fund further. For electric vehicles, salary sacrifice via a company car scheme means you only pay Benefit in Kind (BIK) at 2% of the list price — far cheaper than leasing privately after tax.
How to Use This Calculator
- Enter your current gross salary
- Input the monthly sacrifice amount or total benefit value
- Select the type of benefit (pension, EV, cycle to work, childcare)
- Choose your tax band and student loan plan if applicable
- Compare your take-home pay before and after sacrifice, and see the total tax saving
Key Facts
Your salary cannot be sacrificed below the National Minimum Wage. Salary sacrifice reduces your pensionable earnings, which may affect death-in-service benefits and mortgage affordability assessments (though many lenders now accept the pre-sacrifice figure). The arrangement must be agreed before the work is done — you cannot retrospectively sacrifice salary already earned. Pension salary sacrifice is the most common and broadly beneficial scheme available.