Salary Sacrifice Pension UK: The Complete 2026 Guide
Your '5% pension' is not really 5%. Salary sacrifice rescues NI on both sides of the payslip. Anyone stuck in the £100k trap is leaving roughly two-thirds relief on the table.
Effective pension relief by tax band, 2026/27
Income tax saved plus 8% (or 2%) employee NI on every £1 sacrificed. Employer NI passback can add another 15%.
Key takeaways
Salary sacrifice swaps gross salary for an employer pension contribution, saving income tax and 8% employee NI
Many employers also pass back their 15% employer NI saving, which lands directly in your pension
For earners between £100k and £125,140 it can recover the full personal allowance and deliver around 67% effective relief
Watch out for impacts on mortgage affordability, life cover, statutory pay, and the national minimum wage floor