Salary Sacrifice Calculator 2025/26

How Salary Sacrifice Works

Salary sacrifice is an arrangement where you give up part of your gross salary in exchange for a non-cash benefit — most commonly pension contributions, an electric vehicle lease, or childcare. Because you sacrifice salary before tax and NI are calculated, you save on both.

Pension Salary Sacrifice

With pension salary sacrifice, your employer pays your pension contribution directly from your gross salary. You save income tax at your marginal rate plus NI at 8% (or 2% above £50,270). A 20% taxpayer saves 28% on every £1 sacrificed into their pension. A 40% taxpayer saves 48%.

Electric Vehicle (EV) Salary Sacrifice

EV salary sacrifice schemes let you lease a new electric car through your employer. The benefit-in-kind (BiK) rate for electric vehicles is just 3% in 2025/26, making EV leasing via salary sacrifice highly tax-efficient — especially for higher rate taxpayers.

Employer Savings

Employers also save on the scheme: they pay 13.8% Employer NI on salaries above £9,100. Every £1 of salary sacrificed saves the employer 13.8p in NI. Many employers pass some or all of this saving back to employees as an enhanced pension contribution.