Salary Sacrifice Contribution Calculator

How to calculate Salary Sacrifice Contribution Calculator?

This calculator estimates how reducing your gross pay by a salary sacrifice contribution lowers taxable pay and produces tax and national insurance savings.

Key formula: effective_cost = contribution - (contribution * tax_rate / 100 + contribution * ni_rate / 100)

Using the Salary Sacrifice Contribution Calculator calculator: an example

Example inputs: annual salary £50,000; contribution £5,000; marginal tax rate 20%; national insurance rate 12%.

Step-by-step calculation:

1. New taxable salary = £50,000 − £5,000 = £45,000.
2. Tax saving = £5,000 × 20% = £1,000.
3. NI saving = £5,000 × 12% = £600.
4. Effective annual cost = £5,000 − (£1,000 + £600) = £3,400.

Frequently Asked Questions

Will salary sacrifice affect my pension contributions?

If the sacrifice is into a pension scheme, contributions go directly to the pension and may increase employer contributions; check your scheme rules.

Are there limits to how much I can sacrifice?

Yes. Employer policies and legal limits apply, and large sacrifices can affect benefits and tax bands. Confirm limits with payroll or HR.

Will salary sacrifice affect student loan repayments or state benefits?

It can. Reduced taxable earnings may change thresholds for student loans and some benefits; consult the relevant authorities or payroll for your situation.

Are the estimated savings guaranteed?

No. Estimates assume the entered tax and NI rates and your current tax code; actual savings depend on exact payroll handling and any changes to rates.