Salary Sacrifice Calculator UK 2026 — Pension, Bike & EV Schemes

Salary sacrifice schemes let you exchange part of your salary for benefits, saving tax and National Insurance. Here’s how much you could save.

How Salary Sacrifice Works

The Basic Principle

Without Salary Sacrifice	With Salary Sacrifice
Earn £50,000	Agree to £45,000 salary
Pay tax and NI on £50,000	Pay tax and NI on £45,000
Buy benefit from net pay	Employer provides £5,000 benefit
Less efficient	More efficient

What You Save

Tax Band	Income Tax Saved	NI Saved	Total Saving
Basic rate (20%)	20%	8%	28%
Higher rate (40%)	40%	2%	42%
Additional rate (45%)	45%	2%	47%

Plus employer saves 13.8% NI — often passed to you as extra contribution.

Pension Salary Sacrifice

How It Works

Step	What Happens
1	You agree to reduce salary by pension amount
2	Employee NI saved (8% or 2%)
3	Employer NI saved (13.8%)
4	Employer often adds their NI saving to your pension
5	More goes into your pension

Pension Salary Sacrifice Calculator

Example: £5,000 pension contribution

Method	Basic Rate Taxpayer	Higher Rate Taxpayer
Normal Contribution
Your contribution	£5,000	£5,000
Tax relief added	£1,250 (auto)	£1,250 (auto) + £1,250 (claim)
In pension	£6,250	£6,250
Your net cost	£4,000	£3,000
Salary Sacrifice
Salary reduction	£5,000	£5,000
In pension	£5,000 + employer NI	£5,000 + employer NI
If employer adds 13.8% NI	£5,690	£5,690
Your net cost	£3,600	£2,900
Extra benefit	£440	£440

Full Savings Table

Salary	Contribution	Normal Cost to You	Salary Sacrifice Cost	Saving
£30,000 (basic)	£3,000	£2,400	£2,160	£240
£30,000 (basic)	£6,000	£4,800	£4,320	£480
£60,000 (higher)	£5,000	£3,000	£2,550	£450
£60,000 (higher)	£10,000	£6,000	£5,100	£900
£100,000 (higher)	£20,000	£12,000	£10,200	£1,800

Assumes employer adds their 13.8% NI saving.

Why Employers Offer It

Employer Benefit	Detail
Saves 13.8% NI	On sacrificed salary
Attracts talent	Better benefits package
No extra cost	If they keep NI saving
Can share saving	Adds to your pension

Cycle to Work Scheme

How It Works

Step	What Happens
1	Choose bike and safety equipment
2	Employer buys it
3	You “hire” it via salary sacrifice (12-18 months)
4	At end, buy bike for small fee (typically 3-7%)

Cycle to Work Savings

Bike Cost	Tax Rate	Monthly Sacrifice (12m)	Real Cost	Saving
£500	Basic (28%)	£42	£360	£140 (28%)
£500	Higher (42%)	£42	£290	£210 (42%)
£1,000	Basic (28%)	£83	£720	£280 (28%)
£1,000	Higher (42%)	£83	£580	£420 (42%)
£2,000	Basic (28%)	£167	£1,440	£560 (28%)
£2,000	Higher (42%)	£167	£1,160	£840 (42%)
£5,000	Higher (42%)	£417	£2,900	£2,100 (42%)

E-Bike Example

E-bike Value	£2,500
Your tax rate	Higher (40%)
Salary sacrifice (12 months)	£208/month
Total sacrifice	£2,500
Tax saved (40%)	£1,000
NI saved (2%)	£50
Effective cost	£1,450
Saving	£1,050 (42%)

End of Scheme

Option	What Happens
Buy the bike	Pay “fair market value” (3-7% typically)
Extend hire	Continue small payments
Return bike	Rarely done

Electric Car Salary Sacrifice

How It Works

Step	What Happens
1	Choose electric car from approved list
2	Employer leases it
3	You sacrifice salary for lease + insurance + maintenance
4	Pay Benefit in Kind tax (very low for EVs)
5	At end: return, buy, or new car

Why EVs Work So Well

Factor	Petrol/Diesel	Electric
BIK rate 2026/27	20-37%	3%
Tax you pay	High	Very low
Salary sacrifice benefit	Reduced by BIK	Barely reduced

EV Salary Sacrifice Calculator

Example: £35,000 electric car

Monthly Lease Cost	£450
Gross salary sacrifice	£450/month
Annual sacrifice	£5,400
BIK value (3% of £35,000)	£1,050
BIK tax (higher rate)	£420/year (£35/month)
Your real cost	£485/month

What you get for £485/month:

• Brand new EV
• Insurance
• Maintenance
• Road tax
• Breakdown cover
• Tyres (often)

Comparison: Salary Sacrifice vs Buy/PCP

Method	Monthly Cost	3-Year Total
Salary sacrifice (after tax)	£350 net	£12,600
PCP (from net salary)	£400 + extras	£18,000+
Bank loan	£600+	£21,600+
Cash purchase	£35,000 upfront	Depreciation ~£15,000

Salary sacrifice often 30-50% cheaper than alternatives.

Real-World EV Examples

Car	List Price	Gross Monthly	Net Cost (Higher Rate)
MG4	£27,000	£350	~£250
Tesla Model 3	£40,000	£550	~£380
BMW iX1	£52,000	£700	~£480
Kia EV6	£45,000	£600	~£410

Net cost after tax/NI savings, including BIK.

Other Salary Sacrifice Benefits

Common Schemes

Benefit	Typical Saving	Notes
Childcare vouchers	32-47%	Closed to new joiners
Gym membership	28-42%	Some employers offer
Technology scheme	28-42%	Phones, laptops
Car parking	28-42%	At workplace
Health screening	28-42%	Annual checks

Childcare Vouchers (Legacy)

If You Joined Before Oct 2018	Saving
Basic rate	Up to £933/year
Higher rate	Up to £624/year
Additional rate	Up to £590/year

No new joiners — replaced by Tax-Free Childcare.

Impact on Other Things

What Salary Sacrifice Affects

Impact Area	Effect	Severity
Mortgage applications	Lower gross salary	Medium
Statutory benefits	Based on lower salary	Low
State Pension	Still builds if above LEL	Usually none
Other borrowing	Lower income shown	Low-Medium
Pay rises	Usually percentage of new salary	None

Mortgage Lender Treatment

Lender Approach	How They Handle It
Add back	Add pension sacrifice back to income
Ignore	Use lower gross salary
Varies	Depends on scheme type

Tip: Check lender policy before large salary sacrifice near mortgage application.

Minimum Wage Protection

Rule	Detail
Can’t go below NMW	After sacrifice
Employer should check	Usually automatic
2026/27 NMW	£11.44/hour (21+)

When Salary Sacrifice Works Best

Ideal For

Situation	Why
Higher/additional rate taxpayer	Maximum tax saving
Employer adds NI saving	Extra pension boost
EV scheme available	Huge savings
Not applying for mortgage soon	No income impact

Less Ideal For

Situation	Why
Close to NMW	Limited headroom
Applying for mortgage	Reduces gross salary
Claiming benefits	May affect entitlement
Employer keeps NI saving	Still saves, but less

How to Set Up

Pension Salary Sacrifice

Step	Action
1	Check if employer offers it
2	Complete salary sacrifice form
3	Agreement amends your contract
4	Lower salary, higher pension shows on payslip

Cycle to Work / EV

Step	Action
1	Check which schemes employer offers
2	Choose bike/car from approved provider
3	Get quote
4	Employer approves
5	Salary sacrifice begins

Key Takeaways

1. Salary sacrifice saves tax AND NI — unlike normal pension relief
2. Higher earners save more — 42-47% vs 28%
3. EV schemes are exceptional value — 3% BIK makes them cheap
4. Cycle to Work — save 28-42% on a bike
5. Check mortgage impact — if applying soon
6. Ask employer about NI sharing — for pensions

For related content, see our pension guide, take-home pay calculator, and tax-efficient investing.