Guide

Salary Sacrifice Employer NI Saving 2026/27

Written by James Whitfield · Updated August 2026 · Checked against 2026/27 HMRC rates.

When you sacrifice salary, your employer's National Insurance bill falls too. Employer NI is calculated on your contractual salary. In 2026/27 the rate is 15% on earnings above the £5,000 secondary threshold.1 A £5,000 pension salary sacrifice saves the employer £750. Whether any of that reaches you depends on your employer's scheme rules.

Key takeaways
  • Employer NI is 15% on pay above £5,000, so every £1,000 sacrificed cuts the employer's bill by £150.1
  • A £5,000 pension sacrifice saves the employer £750 a year.1
  • There's no legal duty to pass it back — some pay 100% into your pension, many keep it.2
  • Ask HR: "Do you share the employer NI saving, and at what percentage?" It's rarely advertised.
  • This is separate from your own 8%/2% NI saving, which you get either way.1

How the employer NI saving arises

Employer NI is charged at 15% on earnings above the secondary threshold (£5,000 for 2026/27). When salary sacrifice reduces your contractual salary, the base on which the employer calculates its NI bill also falls.

If your gross salary is £40,000 and you sacrifice £5,000, your employer pays NI on £35,000 rather than £40,000. At 15%, that is a £750 reduction in NI for the year.

The saving arises automatically from the sacrifice. What happens to it does not.

Are employers required to pass on the saving?

No. There is no legal requirement to pass any of the saving back to you. Whether they do is governed by the salary sacrifice scheme agreement.

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're not sure what your employer does, ask HR or payroll, or check the scheme documentation.

One edge case worth knowing: a very small employer whose total NI bill is already wiped out by the £10,500 Employment Allowance3 may have no employer NI left to save on your sacrifice — so there's genuinely nothing extra to pass on. The saving still helps larger employers, and your own tax and NI saving is unaffected either way.4

Worked example: £40,000 salary, £5,000 pension sacrifice

An employee earning £40,000 sacrifices £5,000 into their pension. The employer's NI base drops from £40,000 to £35,000:

Employer NI before — 15% × (£40,000 − £5,000)1£5,250
Employer NI after — 15% × (£35,000 − £5,000)£4,500
Employer NI saving for the year£750

Where that £750 goes: 50% shared → £375 extra into your pension; 100% shared → £750 extra; retained → nothing extra for you.

In every scenario, your own income tax and NI savings from the sacrifice are unaffected by what the employer does with their £750.1

Changes from April 2029

From April 2029, employer NI savings from salary sacrifice pension contributions will be subject to new rules that cap or limit the benefit. This doesn't affect 2026/27. 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.

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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.

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.

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.

  1. National Insurance rates and categories ↗ https://www.gov.uk/national-insurance-rates-letters
  2. Salary sacrifice and the effects on PAYE (HMRC) ↗ https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye
  3. Employment Allowance ↗ https://www.gov.uk/employment-allowance
  4. Workplace pensions ↗ https://www.gov.uk/workplace-pensions
Verified against published UK government guidance.