Pension contribution calculator
See the true cost of pension contributions after tax relief and NI savings — and compare salary sacrifice, relief at source, and net pay arrangements.
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Your employer saves £300.00/year in employer NI. Ask HR if any of this is added to your pension.
Last updated 6 April 2026
Relief at source vs salary sacrifice vs net pay
The three main pension contribution methods differ in how and when tax relief is applied — and each affects your take-home pay differently.
Relief at source: You pay from post-tax income and the pension provider claims 20% basic-rate tax relief from HMRC automatically. Higher-rate taxpayers claim the extra 20% via Self Assessment.
Salary sacrifice: Your gross salary is reduced before tax is calculated. This saves Income Tax at your marginal rate and employee NI (8% or 2%). Employers also save 15% employer NI — many pass this saving into your pension. Salary sacrifice is usually the most tax-efficient option.
Net pay arrangement: Contribution is deducted from gross pay before income tax, giving you full tax relief at your marginal rate automatically. Unlike relief at source, basic-rate taxpayers do not receive the relief as a top-up — it is simply not deducted. Non-taxpayers get no benefit.
The annual allowance 2026/27
The pension annual allowance is £60,000 in 2026/27 — the maximum total contributions (employee + employer + tax relief) that qualify for tax relief. Higher earners may face a tapered allowance: for every £2 of 'adjusted income' above £260,000, the allowance reduces by £1, down to a minimum of £10,000.
Contributions above the annual allowance trigger a tax charge equal to the excess multiplied by your marginal rate. The charge effectively claws back the tax relief given.
Unused annual allowance from the previous three tax years can be carried forward to increase the current year's limit. This can be useful when making a large one-off contribution.
Does pension contribution affect other benefits?
Pension contributions reduce adjusted net income — used to calculate the High Income Child Benefit Charge (charged above £60,000), the personal allowance taper (above £100,000), and eligibility for certain tax credits.
For salary sacrifice specifically, contributions may reduce qualifying pay for mortgage applications and statutory maternity/paternity pay. Discuss with your HR department before making large sacrifice arrangements.
Frequently asked questions
Does my employer's contribution count toward the annual allowance?
Yes. The £60,000 annual allowance covers total contributions: yours + your employer's + any tax relief added by the pension provider. Employer contributions are included in the total.
What is the benefit of salary sacrifice over relief at source?
Salary sacrifice saves employee NI (8% below £50,270, 2% above) on top of income tax relief. Relief at source does not save NI. For a basic-rate taxpayer contributing £5,000/year, salary sacrifice saves an extra £400 in NI compared to relief at source.
Can I contribute more than I earn to a pension?
No. Contributions that qualify for tax relief are capped at 100% of your UK earnings in the tax year (or £3,600 if you have no earnings). Employer contributions and carry-forward rules apply on top of this.
When can I access my pension?
The minimum pension access age rises to 57 in 2028 (from 55 currently). Tax-free cash is normally 25% of the pension value (up to a cap), with the remaining withdrawals taxed as income.
Related guides
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.