Salary sacrifice and your pension

With salary sacrifice you give up part of your gross salary and your employer pays it straight into your pension. Because the money never counts as pay, it escapes both Income Tax and National Insurance — unlike a normal pension contribution, which only saves the tax.

For a higher-rate taxpayer the effect is large: every £100 sacrificed above £50,270 would otherwise lose 40% to tax and 2% to NI, so you're moving money into your pension that would have been taxed at 42%.

There's a second benefit: lowering your taxable pay can pull you back under thresholds that matter — the £100,000 point where the personal allowance starts to taper, or the High Income Child Benefit Charge.

Model it before you commit — sacrifice is usually a fixed arrangement for the year, and going too far can affect mortgage affordability or dip your pay below the National Minimum Wage floor.