A £5,000 pension sacrifice on a £100,000 salary saves approximately £2,100 in income tax and NI in 2026/27. The net cost to your take-home pay is £242/month.
With a £100,000 gross salary, a £5,000 pension sacrifice reduces your taxable salary to £95,000. You pay income tax and National Insurance on the lower figure, not the original £100,000.
At £100,000, some or all of your sacrifice falls within the higher-rate (40%) income tax band. Higher-rate sacrifice saves 40p in income tax per £1 — significantly more efficient than basic-rate relief. Employee NI above £50,270 is only 2%, so the NI saving is smaller on that portion of salary.
The £5,000 goes into your pension. You receive the full £5,000 pension contribution, but your take-home pay only falls by £2,900 per year (£242/month) — the difference is the tax and NI you no longer pay.