Pension contributions calculator, 2026/27

How this is calculated

A personal contribution paid net into a relief-at-source scheme is grossed up automatically by the provider at basic rate, 20.0%, meaning £4,000 paid in becomes £5,000 in the pension, with any higher or additional rate relief claimed separately through self-assessment.

A salary sacrifice arrangement instead reduces your contractual gross salary by the contribution amount, which the employer then pays into the pension as an employer contribution. Because it is never paid as salary, it avoids employee National Insurance entirely and, in most arrangements, employer National Insurance too.

This calculator shows the employee National Insurance saved at the 8% main rate on earnings between the primary threshold and the upper earnings limit, and the employer National Insurance saved at the rate you enter, currently 15% above the secondary threshold.

Why the route matters for directors

For a director-shareholder, an employer contribution paid directly by the company, whether or not routed through salary sacrifice, is usually more efficient than drawing extra salary or dividends and then contributing personally, because it avoids employer and employee NI and reduces corporation tax as a deductible expense subject to normal wholly and exclusively rules.

Salary sacrifice needs a properly documented variation to the employment contract before it takes effect; simply relabelling salary as a pension contribution after the event does not satisfy HMRC's requirements.

Practical considerations

Reducing salary through sacrifice can affect other salary-linked entitlements such as statutory maternity pay, mortgage applications, and pension contributions that are themselves calculated as a percentage of salary, so it is not automatically the right answer for everyone.

Whichever route is used, the total must still fit within the annual allowance for the tax year, so check the Pension Annual Allowance Calculator before committing to a large one-off contribution.

Is salary sacrifice always cheaper?

Usually yes for National Insurance, because sacrificed amounts avoid both employee and employer NI. It reduces your contractual salary though, so check the effect on mortgage applications and any other salary-linked benefits before agreeing to it.

Can my company just pay a pension contribution for me directly?

Yes, an employer contribution paid straight into your pension by the company, without any salary sacrifice, is a normal and often efficient route, provided it satisfies the wholly and exclusively test for corporation tax purposes.

Do I need to claim extra relief if I am a higher rate taxpayer?

For a personal contribution under relief at source, yes, the pension provider only claims basic-rate relief automatically. Higher and additional rate relief must be claimed through your self-assessment return.

Does the employer NI saving automatically go into my pension?

Not automatically; it depends on your employer's policy. Many employers pass some or all of the employer NI saving from salary sacrifice into the pension as an extra contribution, but this should be agreed and documented in advance.