Salary Sacrifice Calculator
From April 2025, employer National Insurance contributions (NICs) are increasing – meaning higher costs for your business. But salary sacrifice pension contributions can help you offset these rising expenses.
Why Choose Salary Sacrifice?
Salary sacrifice allows businesses to reduce taxable payroll, leading to lower NICs while increasing pension contributions for employees – making it a win-win for both employers and staff.
Salary Sacrifice Calculator FAQs
Simply use the slider or enter the number of employees on your payroll, along with their average salary. The calculator assumes the minimum 3% auto enrolment contribution from the employer to estimate the potential savings for both your business and employees by reducing National Insurance contributions.
Salary sacrifice is an arrangement where employees agree to exchange a portion of their salary for non-cash benefits, such as pension contributions or a company car. This reduces taxable income, leading to National Insurance and tax savings for both employees and employers.
Despite its benefits, salary sacrifice is only used by 41% of SMEs in the UK - meaning many businesses are missing out on significant savings.
We help businesses introduce and optimise salary sacrifice for workplace pensions, ensuring both employers and employees maximise their savings.
Since 2019, we’ve been helping businesses set up salary sacrifice pension schemes, offering expert guidance to make the process seamless. Our team provides free consultations to help you understand how much you and your employees could save.
Speak to a Penfold expert today to explore your salary sacrifice options.
- Lower employer National Insurance contributions – reducing overall payroll costs
- Enhanced employee benefits – increasing pension contributions at no extra cost
- Improved staff retention – offering a smarter way to boost employees’ take-home pay
- Lower tax and National Insurance bills – more of their salary goes into their pension
- Higher pension savings – their retirement pot grows faster without extra contributions
- No change to take-home pay – they benefit without feeling the impact in their payslip
While salary sacrifice is a great way to save, there are a few things to keep in mind:
- Minimum wage rule – You cannot reduce an employee’s salary below the legal minimum.
- Life insurance & loan applications – Some mortgage or loan providers base eligibility on salary. A letter from the employer can usually resolve this, but it’s worth checking.
- Statutory maternity & paternity pay – These benefits are calculated based on average earnings, meaning employees may receive less if they reduce their salary.
Most employees can take advantage of salary sacrifice, but it may not be suitable for low earners, as their salary cannot drop below the minimum wage. Employees should also check how it affects their state benefits or personal tax situation.
Savings depend on the number of employees and their salaries. Our salary sacrifice calculator gives an instant estimate of how much you could save annually on National Insurance contributions.
Penfold makes it easy! We guide businesses through:
- Setting up a salary sacrifice agreement
- Communicating the benefits to employees
- Ensuring compliance with HMRC rules
- Ongoing support to optimise savings
Contact us today to start saving with salary sacrifice.