Salary sacrifice
An arrangement where you reduce your gross salary and your employer pays the difference directly into your pension, saving both income tax and National Insurance.
Salary sacrifice is usually the most tax-efficient way to contribute to a pension because you avoid both income tax (20-45%) AND employee National Insurance (8% main rate, 2% above £50,270) on the sacrificed amount. With RAS you only save income tax.
The trade-off: your official salary is lower, which can affect mortgage applications, statutory pay (maternity/paternity), and death-in-service benefits. Some employers also pass on their 13.8% employer NI saving to your pension — always ask, because this can add thousands per year to your pot.
Salary sacrifice is particularly powerful between £100,000 and £125,140 (the 60% trap) and between £60,000 and £80,000 (HICBC reduction).
This calculator provides estimates based on 2025/26 tax rates and is not financial advice. Scottish taxpayers are subject to different income tax rates and bands. The calculations assume your salary is your only source of income and do not account for benefits in kind or other taxable income.
For personalised guidance on your pension contributions, speak to an FCA-regulated financial adviser. You can find one via Unbiased or VouchedFor.