Guide

Salary Sacrifice Employer NI Saving 2026/27

Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.

When an employee sacrifices part of their salary, the employer's National Insurance bill falls too — because employer NI is calculated on the employee's contractual salary. In 2026/27 the employer NI rate is 15% on earnings above the £5,000 secondary threshold. A £5,000 pension salary sacrifice therefore saves the employer £750. Whether any of that saving reaches you depends entirely on your employer's scheme rules.

How the employer NI saving arises

Employer National Insurance is charged at 15% on the portion of each employee's earnings above the secondary threshold (£5,000 for 2026/27). When a salary sacrifice arrangement reduces an employee's contractual salary, the base on which the employer calculates its NI bill also falls.

For example, if your gross salary is £40,000 and you sacrifice £5,000, your employer pays NI on £35,000 rather than £40,000 — a £5,000 smaller base. At 15%, that means a £750 reduction in the employer's NI liability for the year.

This saving arises automatically as a result of the sacrifice. It does not depend on employer action, but what happens to that saving does.

Are employers required to pass on the saving?

No. There is no legal requirement for an employer to pass any of the employer NI saving back to you. Whether they do is governed by the salary sacrifice scheme agreement, which is a contractual matter between you and your employer.

Employers handle this differently:

Pass on 100% — the full NI saving is added to your pension as an extra employer contribution.
Pass on a percentage — commonly 50%, added to the pension.
Retain the saving — the employer keeps it to offset administration costs or simply as a benefit to the company.

If you are unsure what your employer does, ask your HR or payroll team — or check the scheme documentation.

Worked example

Scenario: £5,000 pension salary sacrifice

An employee earning £40,000 agrees to sacrifice £5,000 into their pension.

Employer NI saving: 15% × £5,000 = £750
If employer passes on 50%: extra £375 added to employee pension
If employer passes on 100%: extra £750 added to employee pension
If employer retains it: employee receives no additional benefit beyond their own sacrifice

Note that in all scenarios, the employee's own income tax and NI savings from the sacrifice are unaffected by whether the employer passes on anything.

Changes from April 2029

The government has announced that from April 2029, employer NI savings from salary sacrifice pension contributions will be subject to new rules that cap or limit the benefit. This does not affect 2026/27 calculations — the full 15% saving applies now.

For detail on the upcoming changes, see the GOV.UK guidance on salary sacrifice pension changes from April 2029.

Common mistakes and misconceptions

Assuming the saving is automatic. The NI saving occurs automatically, but whether it benefits you depends on scheme rules.
Conflating employer NI and employee NI. They are separate. Your own NI saving (8% or 2%) happens regardless of what the employer does with theirs.
Expecting the same deal as a colleague at another employer. Every scheme is different. Some employers are generous; many are not.
Forgetting this may change from April 2029. Factor future rule changes into longer-term pension planning.

Try the calculator

Use our free salary sacrifice calculator to see your income tax saving, employee NI saving and employer NI saving side by side.

Open the calculator →

Frequently asked questions

Is my employer required to pass on their NI saving?

No. There is no legal requirement to do so. Whether your employer passes on any or all of the NI saving is determined by your salary sacrifice scheme agreement. Some employers pass on 100%, some pass on 50%, and many retain the saving entirely.

How do I find out if my employer passes on the saving?

Check your salary sacrifice scheme documentation, ask your HR or payroll team, or look in your employee handbook. If the scheme passes on employer NI savings, this is usually clearly described in the scheme rules.

What is the employer NI rate for 2026/27?

The employer NI rate for 2026/27 is 15% on earnings above the secondary threshold of £5,000 per year. This is the rate that applies to most employees. The saving from a salary sacrifice is 15% of the sacrificed amount.

What happens to the employer NI saving from April 2029?

From April 2029, the government intends to restrict the employer NI advantage from salary sacrifice pension contributions. The full details are available on GOV.UK. The current 2026/27 rules are unaffected — the 15% saving applies in full until those changes take effect.

Does the employer NI saving affect my own pension contribution?

Not directly. Your sacrifice goes into your pension regardless. If your employer passes on their NI saving, it appears as an additional employer contribution on top of their usual employer contribution — boosting your total pension input for the year.

Official sources

This guide is for general information only. It does not constitute financial, tax or legal advice. Tax rates and rules can change. Always check current GOV.UK guidance and consult a qualified adviser before making decisions.