Employer NI Saving from Salary Sacrifice: How Much, How to Claim, What to Ask HR

How the employer NI saving arises

When an employee sacrifices salary, their gross pay is reduced. Employer National Insurance is calculated on gross pay above the secondary threshold (£5,000 in 2026/27) at a rate of 15%. By reducing gross pay, salary sacrifice directly reduces the employer's NI liability. For a single employee sacrificing £5,000 per year, the employer saves 15% × £5,000 = £750. For a team of 100 employees each sacrificing £5,000, the employer saves £75,000 per year.

This is a genuine cost saving for the employer, not a transfer from one pocket to another, but an actual reduction in payroll tax. HMRC permits employers to pass this saving on to employees in any form, including as additional employer pension contributions, enhanced salary sacrifice limits, or simply as a higher take-home benefit package.

Full passthrough: the most employee-friendly arrangement

Under full passthrough, the employer directs 100% of their NI saving into the employee's pension alongside the employee's own sacrifice. On a £5,000 sacrifice, the employer adds £750 to the pension. This means the employee's pension receives £5,750 (£5,000 sacrifice + £750 employer NI passthrough), while their take-home pay reduces only by the post-tax cost of the £5,000 sacrifice (roughly £3,400 for a basic-rate taxpayer). The pension contribution efficiency is exceptional, each pound of net pay reduction delivers roughly £1.69 into the pension.

Full passthrough is most commonly offered by larger employers who have set up salary sacrifice schemes specifically with NI sharing in mind. Public sector employers, large financial services firms and technology companies often offer it. Where offered, it effectively supercharges the pension sacrifice return and should be strongly preferred over personal pension contributions made outside the scheme.

Partial passthrough and common structures

Many employers offer partial passthrough, typically 50% of the NI saving, meaning they keep 50% for themselves and direct 50% to the employee's pension. On a £5,000 sacrifice this adds £375 to the pension. This is still a meaningful benefit. Some employers offer a tiered structure: 100% passthrough up to a contribution threshold, then a lower rate above it.

Where no passthrough is offered, the full employer NI saving accrues to the business. In this situation, employees still benefit from the employee NI saving (8% at main rate) and the income tax saving, the sacrifice is still financially worthwhile. But if you have leverage in salary negotiations, the absence of NI matching is a legitimate point to raise with an employer.

What to ask your employer

Before entering into a salary sacrifice arrangement, ask HR the following questions. First: does the employer pass on any NI savings, and if so what percentage and in what form? Second: is the sacrifice amount flexible, can it be changed mid-year or only at specific windows? Third: does sacrificing salary affect any other employment benefits such as death-in-service cover, income protection or maternity pay, which are often calculated on contractual salary?

If your employer does not currently operate a salary sacrifice scheme, you can propose one. The employer will need to amend employment contracts and set up payroll arrangements, but the financial benefit to the employer (NI savings on all participating employees) often makes it worth pursuing. Provide our employer NI saving calculator output as a concrete illustration of the potential saving.