NHS Salary Sacrifice Calculator

See what a car lease, Cycle to Work or pension AVC by salary sacrifice really costs your take-home pay, how much tax and National Insurance it saves, and what it does to your NHS pension.

Free, no sign-up. Part of our NHS Savings & Salary Sacrifice hub. Updated October 2026.

Short answer

Salary sacrifice lowers your gross pay, so you pay less income tax, less National Insurance and a lower NHS Pension contribution. A £3,000 a year car lease for a Band 5 nurse on point 2 costs about £1,961 in take-home pay (65p per £1), but it also reduces your pensionable pay, giving up about £166.67 a year of pension for life over a 3-year lease. Main NHS Pension contributions are not salary sacrifice, and from April 2029 only the first £2,000 a year of salary-sacrificed pension contributions stays free of National Insurance.

What are you sacrificing salary for?

Quick start

Include enhancements if you want them counted. Not sure? Use the NHS Pay Calculator first.

Where you work

A car lease's annual cost, or a Cycle to Work repayment per year.

More options

Your inputs are saved on this device only.

What it really costs your take-home pay

£163 a month

£1,961 a year to sacrifice £3,000. That is 65p in take-home for every £1 sacrificed.

Amount sacrificed£3,000
Income tax you no longer pay-£550
National Insurance you no longer pay-£240
NHS Pension contribution you no longer pay-£249
Take-home pay falls by£1,961 a year

Effect on your NHS pension (2015 CARE scheme)

£55.56 a year of pension for each year

A lower pensionable pay means a smaller pension is banked (1/54th of pensionable pay). Over a 3-year term that is £166.67 a year of pension income given up for life, worth about £3,333 at the site's 20:1 valuation. It is an ongoing reduction to your eventual pension, not cash you lose today.

Year-by-year pension effect
YearPay withoutPay withPension lost
1£34,592£31,592£55.56
2£34,592£31,592£55.56
3£34,592£31,592£55.56

Information to weigh, not a reason to avoid salary sacrifice. Check with your payroll team and the scheme provider, and consider the effect on mortgage affordability, statutory maternity pay and sick pay, which are based on your reduced salary. Not financial advice.

What does salary sacrifice really cost? Worked examples

England, full-time pay, 2026/27 rates, standard tax code. "Take-home cost" is how much your yearly take-home pay falls, which is the real price of the arrangement to you. For the AVC rows, the "from April 2029" column applies the £2,000 National Insurance cap.

ScenarioTax savedNI savedPension contribution savedTake-home cost per yearCost per £1Pension given up per year
Band 5, point 2: car lease, £3,000 a year £550 £240 £249 £1,961 65p £55.56
Band 6, point 1: Cycle to Work, £1,000 a year £180 £80 £98 £642 64p £18.52
Band 5, point 2: AVC by sacrifice, £100 a month £220 £96 £100 £784 65p £22.22
Band 7, point 2: AVC by sacrifice, £300 a month £649 £188 £353 £2,409 (£2,537 from 2029) 67p £66.67
Band 8a, point 2: AVC by sacrifice, £500 a month £1,808 £120 £642 £3,430 (£3,510 from 2029) 57p £111.11

Part of each saving is the lower NHS Pension contribution that comes with lower pensionable pay. A larger sacrifice can also drop you into a lower contribution tier, which cuts the rate on all of your pensionable pay, so the real saving can jump. The calculator includes that effect and tells you when it applies.

Does salary sacrifice reduce my NHS pension?

For most arrangements, yes. NHS Employers says that under the 2015 scheme salary sacrifice reduces your gross pensionable pay, so a smaller pension is built for each scheme year it runs. The 2015 scheme banks 1/54th of your pensionable pay each year, so every £3,000 of pensionable pay sacrificed gives up £3,000 / 54 = £55.56 of pension a year, for life, for each year of the arrangement. Over the 3-year lease in our first example that is £166.67 a year, with a capitalised value of about £3,333 at the 20:1 convention used in our NHS Pension Calculator.

That is information to weigh, not a reason to avoid salary sacrifice: many people still find a lease or bike scheme worthwhile once they see the real numbers. Two cautions. First, members with legacy final salary benefits (1995 or 2008 Section) can be hit harder if the reduction falls in the years used to calculate final pensionable pay. Second, the rules for particular schemes can differ, for example in Scotland, so ask your employer for your own position. See NHS Pension Scheme 2015 explained and NHS Pension and maternity leave for how a lower salary feeds through.

NHS AVCs and the April 2029 salary sacrifice cap

You cannot pay your main NHS Pension contributions by salary sacrifice (the BMA is explicit on this). They come off your pay before tax but not before National Insurance. What some employers offer is salary sacrifice into an additional voluntary contribution (AVC) pot, where the extra saves employee National Insurance as well as income tax.

Budget 2025 announced that from April 2029 the National Insurance exemption on salary-sacrificed pension contributions will be capped at £2,000 a year per employee, with both employee and employer National Insurance due above that. Income tax relief is not changed. In our Band 7 example sacrificing £3,600 a year, that takes the yearly take-home cost from £2,409 to £2,537; for the Band 8a example sacrificing £6,000 it goes from £3,430 to £3,510. The cap does not apply to car, bike or technology schemes, and it does not affect your main NHS Pension contributions.

⚠Check the latest rules

The cap was announced in a Budget document and the detailed rules may be refined, including how it applies where you have more than one employer. We will update this page, but check gov.uk and your employer's AVC provider before relying on any 2029 figure.

Which salary sacrifice schemes do NHS staff use?

How the calculation works

We work out your tax, National Insurance, NHS Pension contribution (including the tier) and any student loan twice: once on your pay as it is and once on your pay after the sacrifice. The difference in take-home pay is the real cost. The pension effect then uses the 2015 CARE accrual of 1/54th of pensionable pay, with the capitalised value at the site's standard 20:1 factor. The 2029 view applies the £2,000 cap to the National Insurance saving. Nothing is sent anywhere: it all runs in your browser.

Sources and accuracy

Frequently asked questions

How much tax do I save with salary sacrifice? +
It depends on your pay, because you save income tax at your marginal rate plus employee National Insurance (8% or 2%) on the amount sacrificed, and your NHS Pension contribution falls too if pensionable pay is reduced. For a Band 5 nurse on point 2 sacrificing £3,000 a year to a car lease, the calculator shows £550 of tax and £240 of National Insurance saved, so the lease costs about £1,961 in take-home pay, not £3,000.
Does salary sacrifice reduce my NHS pension? +
Usually yes. NHS Employers says that under the 2015 scheme salary sacrifice reduces your gross pensionable pay, so a smaller pension is built for each year it runs (1/54th of pensionable pay is banked each scheme year). Some arrangements may be treated differently, for example the BMA notes that childcare vouchers and cycle to work do not reduce pensionable pay in Scotland, so ask your employer or NHS Pensions for your own scheme. Members with legacy 1995 or 2008 Section benefits can be affected if the reduction falls in the final salary window.
Can I salary sacrifice into the main NHS Pension? +
No. The BMA is explicit that it is not possible to contribute to the NHS Pension Scheme itself by salary sacrifice. Your main member contributions come off your pay under the net pay arrangement, which gives income tax relief but no National Insurance relief. What some employers offer is salary sacrifice into an AVC (additional voluntary contribution) on top of the main scheme.
How do NHS AVCs through salary sacrifice work? +
If your employer offers a shared-cost AVC scheme, your contractual pay is reduced and the same amount is paid into your AVC pot. Because your pay is lower you save income tax and employee National Insurance, so the pot grows for less than its face value in take-home terms. The sacrifice also reduces your pensionable pay, which can slightly reduce the main pension you build and may change your contribution tier. Ordinary AVCs without sacrifice are covered in our AVC guide.
What is the April 2029 salary sacrifice pension cap? +
At Budget 2025 the government announced that from April 2029 only the first £2,000 a year of salary-sacrificed pension contributions will be free of National Insurance. Anything above that is subject to National Insurance as normal, for both employee and employer. Income tax relief is unchanged. It affects NHS AVCs made by salary sacrifice, not your main NHS Pension contributions, and it does not apply to car, bike or technology schemes. The detail may be refined, so check the latest guidance. Our calculator shows both views for AVCs.
Is there a limit to how much salary I can sacrifice? +
Your pay after sacrifice cannot fall below the National Minimum Wage, which is not an issue at NHS pay levels, and your employer's scheme sets its own limits. For pension sacrifice there is also the Annual Allowance (£60,000 for most people, tapered for high earners), which counts all pension saving, and from April 2029 the £2,000 National Insurance cap described above.
Will salary sacrifice affect my mortgage, maternity pay or sick pay? +
It can, because your contractual salary is lower. Mortgage lenders often assess affordability on your reduced salary, and statutory pay such as maternity pay is based on average earnings after the sacrifice, which can reduce it. Some NHS terms protect certain pay in sick pay and maternity calculations, so check with payroll before starting a scheme if you are planning a mortgage or a baby. See our guides on pension and maternity leave and on maternity pay.
Does cycle to work affect my NHS pension? +
It can, because the repayments reduce your gross pay for the agreement period. The effect is usually small because bike schemes are modest, for example £1,000 a year costs about £19 a year of pension for each year it runs on your figures here. Use the calculator with your own repayment and term, and untick the pensionable pay option if your employer confirms the scheme does not reduce it.
Is an NHS car lease salary sacrifice worth it? +
Often yes for the right car and person, because the tax and National Insurance saving is real, but a lease also reduces pensionable pay, and the saving varies by tax band and car. The pension effect is one cost to weigh among others such as insurance, mileage and what happens if you leave the NHS during the lease. Our car leasing guide covers the scheme itself; this calculator gives the take-home and pension figures for yours.
What is the 20:1 capitalised value shown for the pension given up? +
It converts the yearly pension income you give up into a single comparable figure using the 20 to 1 valuation convention used across FrontlinePay's pension tools. It is a way to compare an ongoing pension reduction with a one-off cost. It is not cash you could ever withdraw, because your NHS Pension is paid as an income from retirement.
Does salary sacrifice help with the £100,000 Personal Allowance taper? +
It can, because the allowance is tapered on adjusted net income and sacrificing pay reduces it. For NHS staff, main pension contributions already reduce that figure under the net pay arrangement, so the zone where the taper bites starts higher than £100,000 of gross pay. This is a specialist area, so take advice before relying on it.

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