UK PAYROLL
Salary sacrifice, explained.
Trade some gross salary for an employer-paid benefit like extra pension, an electric car or a bike. You save tax and NI; here is what you actually walk away with.
Educational estimates only. Not tax, legal, financial, payroll or employment advice. Verify with your employer's payroll team or HMRC.
Read more on salary sacrifice
Pension salary sacrifice
The most common scheme. Save NI on top of tax relief.
Cycle to Work
Up to £1,000 off a bike via gross-pay sacrifice.
Electric vehicle salary sacrifice
Lease a new EV through payroll. The 2 percent BIK rule.
Salary sacrifice and your mortgage
Why some lenders use pre-sacrifice gross.
Salary sacrifice and state pension
When sacrifice can reduce your contribution years.
Salary sacrifice on a bonus
Bonus sacrifice can save almost half the bonus to tax + NI.
Common questions
How does salary sacrifice save me money?
Sacrificed amounts come off your gross pay, so you do not pay income tax or National Insurance on them. Your employer also saves their NI (15 percent in 2026/27), which they sometimes pass back into your benefit.
Will salary sacrifice affect my mortgage?
Some lenders use your pre-sacrifice gross salary for affordability, others use post-sacrifice. Halifax, Nationwide and Skipton typically use pre-sacrifice with documented payslips. Always tell your broker about any active sacrifice arrangements.
Can salary sacrifice reduce my state pension?
Possibly, if it brings your earnings below the Lower Earnings Limit (£6,396 in 2026/27) for the year. For most full-time employees, sacrifice does not move the needle on the state pension because they remain well above the LEL.
Can I cancel salary sacrifice?
Most schemes allow you to opt out at the next renewal window, often once a year. Lifestyle change events (marriage, having a child, redundancy) may trigger an off-cycle option. Check your scheme rules.
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Open the toolPayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, payroll, accounting, pension, benefits or employment advice. Always verify your payslip, tax code, deductions and take-home pay with your employer's payroll department, HMRC, your pension provider, a qualified accountant, tax adviser or another appropriately qualified professional.