Calculator

Salary Sacrifice Employer NI Saving Calculator 2026/27

Estimate how much employer National Insurance a salary sacrifice arrangement saves, and how much could be passed on as extra pension.

Annual sacrifice per employee

Number of employees on the scheme

% of employer NI saving passed on as extra pension

The 15% employer NI rate (from April 2025)

From 6 April 2025, the employer National Insurance rate increased to 15% (from 13.8%), and the secondary threshold was reduced to £5,000/year (from £9,100). This means employer NI is payable at 15% on employee earnings above £5,000 per year.

Under a salary sacrifice arrangement, the employee's contractual salary is lower — so the employer pays NI on a reduced gross figure. For each £1,000 of sacrifice, the employer saves £150 in employer NI (assuming the salary sits above the secondary threshold throughout).

This calculation uses a simplified approach: it assumes the full sacrifice amount is above the £5,000 secondary threshold. For very low salaries or large sacrifices that cross the threshold, the actual saving may be slightly lower.

Why employers pass on some of the saving

Employers are not required to share their NI saving with employees, but many choose to for several reasons:

Recruitment and retention: A higher effective pension contribution makes the total remuneration package more attractive.
Employer pension commitments: Some employers use the NI saving to top up contributions to auto-enrolment minimums or beyond.
Cost-neutral incentive: Passing on 100% of the NI saving costs the employer nothing net — the pension contribution replaces the NI that would otherwise have been paid to HMRC.

See our guide: How salary sacrifice saves employer National Insurance.

Frequently asked questions

Does every salary sacrifice arrangement save employer NI?

Yes, for any sacrifice that takes the employee's gross pay below what it would otherwise have been above the secondary threshold (£5,000/year). Employer NI is charged at 15% on the difference, so any reduction in gross pay reduces employer NI proportionally. Benefits-in-kind such as electric cars may be taxed differently, but pension salary sacrifice always produces an employer NI saving.

Is the employer required to pass on the NI saving?

No — there is no legal requirement. It is entirely at the employer's discretion. Some employers pass on all of it, some pass on a percentage, and some retain it. Many medium and large employers have a policy of passing on 50% or 100% as a matter of course, particularly for pension sacrifice. It is worth asking your HR team what the policy is.

What is the secondary threshold?

The secondary threshold is the earnings level above which employer NI applies. For 2026/27 it is £5,000 per year (equivalent to £96.15 per week or £416.67 per month). Employer NI of 15% applies to earnings above this threshold. If a sacrifice brings an employee's earnings below £5,000 (extremely unlikely in practice), the employer NI saving on that portion would be zero.

How do I implement a salary sacrifice scheme?

A salary sacrifice scheme requires a formal variation to each participating employee's contract of employment. HMRC guidance requires the arrangement to be a genuine agreement — not a simple pay deduction. You will need to update employment contracts, payroll systems, and pension contribution records. Many pension providers offer template scheme documentation. See GOV.UK guidance on salary sacrifice for details.

Official sources

This calculator provides estimates only. It does not constitute financial, tax or legal advice. Always check current GOV.UK guidance and consult a qualified adviser before making decisions.