How Much Can You Salary Sacrifice? Limits for 2026/27
Written by James Whitfield · Last reviewed 19 October 2026 · Checked against GOV.UK and HMRC guidance for 2026/27.
There is no single maximum written into law. What stops you is a floor under your cash pay, a ceiling on how much can go into pensions each year, and your employer's own scheme rules. This guide works out each limit with 2026/27 figures.
You can sacrifice as much as your employer allows, as long as your cash pay stays at or above the National Minimum Wage for the hours you work13 (£12.71 an hour at 21 and over: £24,784.50 a year on a 37.5-hour week2) and your total pension saving, including your employer's contributions, stays within the £60,000 annual allowance plus any carry forward.45 On a £40,000 salary that floor allows up to £15,215.50 a year (38%).
- Minimum wage floor: a sacrifice must not take cash earnings below the National Minimum Wage, checked for each pay period.13
- Annual allowance: £60,000 across all your pensions, from you and your employer; £10,000 if the money purchase annual allowance applies.4
- Carry forward: unused allowance from the three previous tax years, if you were a scheme member in those years.5
- Very high incomes: the allowance tapers to as little as £10,000 above £260,000 of adjusted income.7
- The 100% of earnings limit on tax relief applies to your own contributions, not to employer contributions made through salary sacrifice.6
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Limit 1: the minimum wage floor
Salary sacrifice is a reduction in pay, not a deduction from it, so the sacrificed amount lowers your pay for minimum wage purposes.3 An arrangement must not reduce your cash earnings below the minimum wage, and employers are expected to cap sacrifices to prevent it.1 Ordinary deductions such as tax, NI, student loan repayments and a pension contribution taken from your pay do not count against the minimum wage.3
| Rate from 1 April 2026 | Hourly | 37.5 hours a week, a year |
|---|---|---|
| 21 and over (National Living Wage) | £12.71 | £24,784.50 |
| 18 to 20 | £10.85 | £21,157.50 |
| Under 18 and apprentices | £8.00 | £15,600.00 |
Rate × 37.5 hours × 52 weeks. Rates from GOV.UK.2 Apprentices aged 19 or over who have finished their first year get the rate for their age.
Worked example: the most a £28,000 earner can sacrifice
| Salary, 37.5 hours a week, aged 25 | £28,000 (£2,333.33 a month) |
| Minimum wage floor: £12.71 × 37.5 × 52 | £24,784.50 (£2,065.38 a month) |
| Most that can be sacrificed | £3,215.50 a year (about £267.96 a month) |
The check is made for each pay reference period, which is never longer than a calendar month, so in a month when you work extra hours without extra pay the floor rises and the headroom shrinks.3 The same floor gives a ceiling of £5,215.50 (17.4%) on £30,000, £15,215.50 (38.0%) on £40,000 and £35,215.50 (58.7%) on £60,000, before the other limits below. See salary sacrifice and the minimum wage for who is most often affected.
Limit 2: the £60,000 annual allowance
The annual allowance caps total pension saving for the tax year before a tax charge: everything you, your employer and anyone else pay into defined contribution pensions, or the growth in a defined benefit pension.4 Salary sacrifice contributions count in full, because they are paid in as employer contributions.
The 100% of earnings rule is a separate limit, on tax relief for contributions you make yourself.6 HMRC sets no fixed limit on employer contributions, so a salary sacrifice is not capped by it.6 In practice the minimum wage floor stops you sacrificing all your pay anyway.
| Salary before sacrifice | £90,000 |
| Employer contribution on top (5%) | £4,500 |
| Annual allowance left: £60,000 − £4,500 | £55,500 |
| Salary after a £55,500 sacrifice (well above the minimum wage floor) | £34,500 |
| Income Tax saved: £39,730 × 40% + £15,770 × 20% | £19,046 |
| Employee NI saved: £39,730 × 2% + £15,770 × 8% | £2,056.20 |
| Cost to take-home pay for £55,500 in the pension | £34,397.80 |
England, no other income. Going further would need unused allowance carried forward.5 Your employer would also save £8,325 of NI (15%).
Carry forward, the taper and the MPAA
- Carry forward lets you add unused allowance from the previous three tax years, used earliest first. You must have been a member of a registered pension scheme in each year you carry forward from.5
- The tapered annual allowance applies only when threshold income is over £200,000 and adjusted income is over £260,000; the allowance falls £1 for every £2 above £260,000, to £10,000. A salary sacrifice set up after 8 July 2015 is added back to threshold income, so it cannot get you under £200,000.7 See salary sacrifice above £125,140.
- The money purchase annual allowance of £10,000 applies once you have flexibly taken taxable money from a pension, and unused MPAA cannot be carried forward.45
More detail is in salary sacrifice and the annual allowance.
Other checks before a large sacrifice
- Statutory pay. Salary sacrifice can reduce statutory pay such as maternity pay, and if it takes average weekly earnings below the Lower Earnings Limit (£129 a week) the employer does not have to pay it at all.19 See maternity pay.
- When you can change it. You can normally opt in or out only with a contract change, and arrangements may allow changes after life events such as marriage, divorce, or a partner being made redundant or becoming pregnant.1
- The April 2029 cap. From 6 April 2029 only the first £2,000 a year of pension salary sacrifice will be free of NI. You will still be able to sacrifice more, and the Income Tax relief is unchanged.8
- Borrowing. A lower contractual salary can reduce what some mortgage lenders offer; see salary sacrifice and mortgages.
To see the effect on your take-home pay, use the pension salary sacrifice calculator.
Frequently asked questions
Is there a maximum amount you can salary sacrifice?
There is no fixed legal maximum. Your cash pay cannot fall below the National Minimum Wage for the hours you work, pension saving above the £60,000 annual allowance (plus any carry forward) triggers a tax charge, and your employer's scheme may set its own limits.
What is the maximum salary sacrifice percentage?
There is no statutory percentage. On a 37.5-hour week the minimum wage floor for someone aged 21 or over is £24,784.50 a year, so the most you could sacrifice is about 17.4% of a £30,000 salary, 38.0% of £40,000 and 58.7% of £60,000, subject to the annual allowance and your scheme rules.
Does the 100% of earnings limit apply to salary sacrifice?
No. The 100% of earnings limit caps tax relief on your own contributions. Salary sacrifice contributions are paid by your employer, and HMRC sets no fixed ceiling on employer contributions. The annual allowance still applies to the total.
Can I use carry forward with salary sacrifice?
Yes. Carry forward lifts the annual allowance by any unused allowance from the previous three tax years, used earliest first, as long as you were a member of a registered pension scheme in those years. It cannot be used to increase the £10,000 money purchase annual allowance.
Is there a minimum amount I have to sacrifice?
Not in law. Some employers set a minimum or only let you change the amount once a year or after a life event such as marriage, divorce or pregnancy, so check your scheme rules.
This guide is general information, not financial or tax advice. Figures assume England, Wales or Northern Ireland tax rates and no other income. Your employer's scheme rules may set lower limits.
Sources & references
Every headline figure in this guide is checked against the official HMRC and GOV.UK pages below and reflects the confirmed 2026/27 tax year. Each link opens the relevant official page in a new tab.
- Salary sacrifice and the effects on PAYE (HMRC) ↗ https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye
- National Minimum Wage and National Living Wage rates ↗ https://www.gov.uk/national-minimum-wage-rates
- Calculating the minimum wage: salary sacrifice and deductions ↗ https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage
- Rates and allowances: pension schemes ↗ https://www.gov.uk/government/publications/rates-and-allowances-pension-schemes/pension-schemes-rates
- Check unused annual allowances (carry forward) ↗ https://www.gov.uk/guidance/check-if-you-have-unused-annual-allowances-on-your-pension-savings
- HMRC PTM024200: overview of pensions taxation, contributions ↗ https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm024200
- Pension schemes: work out your tapered annual allowance ↗ https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance
- Changes to salary sacrifice for pensions from April 2029 ↗ https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029/changes-to-salary-sacrifice-for-pensions-from-april-2029
- National Insurance rates and categories ↗ https://www.gov.uk/national-insurance-rates-letters