Salary sacrifice pension contributions – November 2026 Budget calculator

Treasury chatter (Guardian, HL, Telegraph) suggests the Chancellor could use the November 2026 Budget to cap National Insurance savings from salary sacrifice pension contributions at around £2,000 a year.

This calculator compares today’s rules with that rumoured cap, showing employee NI, employer NI, income tax, and the child benefit charge so you can gauge the impact of capping salary sacrifice pension contributions ahead of any announcement. It’s illustrative scenario planning, not personal tax advice.

I built this because I wanted to know how the rumoured cap might hit my own take-home pay; sharing it here in case it helps you too. I sometimes build other useful little tools like this one, so feel free to check them out.

Key modelling assumptions

  • 2025/26 England & Wales tax and NI thresholds, annualised from weekly NI bands; Scottish rates are excluded.
  • Salary sacrifice reduces taxable pay plus both employee and employer NI bases; the proposed cap only limits the NI-free portion.
  • Child benefit clawback follows HMRC adjusted net income rules; no student loans, tapered allowances, or other credits are modelled.
  • Inputs are annual, cover one employment, and round to pounds/pence so penny differences can appear.

Inputs

Pre-sacrifice gross salary for the tax year.

Pension via salary sacrifice – input type
%

If using %, this is the share of salary sacrificed into your pension via salary sacrifice contributions. If using fixed amount, this is the annual £ sacrificed.

Rumoured policy: only this amount of sacrificed salary per year remains NI-free.

Approximate total child benefit for the year. If you don’t receive it, set this to 0.

Uses the assumptions listed above; update the values if policy thresholds change.

Results at a glance

Compare what changes for you and for the employer if an annual NI cap of £2,000 on salary sacrifice pension contributions went live.

Employee outcome

Take-home (incl. child benefit)

–

–

Current rules:
£–
With NI cap:
£–
Change per year:
£–
Change per month:
£–
Current rules With NI cap Income tax £– £– Employee NI £– £– Child benefit (net) £– £–

Employer outcome

NI bill

–

–

Current rules:
£–
With NI cap:
£–
Change per year:
£–
Change per month:
£–

Inside IR35 or umbrella contractor?

Employer NI still comes out of your day rate. The calculator shows an employer NI change of £– a year (about £– a month). Expect umbrellas to pass that on.

To keep pace, you (or your umbrella if they're feeling generous!) would need to add roughly £– to your day rate, assuming about 220 chargeable days for the year.

Scenario snapshot

The headline assumptions behind the calculation.

Gross salary:
£–
Salary sacrifice pension contributions:
£–
NI-free portion if capped:
£–
Annual child benefit received:
£–

Ready reckoner

Use this quick guide to estimate how each extra £1 of sacrifice above the cap behaves before you plug in exact numbers.

Salary band Employee NI clawed back Employer NI clawed back Combined impact per £1
Below £50,270 (main NI rate) 8p 15p 23p
Above £50,270 (upper NI rate) 2p 15p 17p
Employer only calculation — 15p 15p

Example: if you sacrifice £5,000 above the cap while earning below the upper earnings limit, expect roughly £5,000 × 23% ≈ £1,150 of total NI to be clawed back (8% from you, 15% from your employer). Exact figures still depend on the interactions with income tax and child benefit, so run the full calculator for a tailored view.

How this calculation works

Three scenarios are modelled: no sacrifice, today’s rules, and a capped NI relief scenario. The calculator re-runs income tax, employee NI, employer NI, and child benefit for each.

  1. Your salary sacrifice pension contributions reduce taxable salary for income tax and the child-benefit test regardless of the cap.
  2. Under current rules, both employee and employer NI ignore the sacrificed pay.
  3. Under the cap, only the first £2,000 of sacrifice avoids NI; everything above is treated as NI-able pay again.
  4. The tool takes the difference between the two policy runs to show yearly and monthly gains or losses.
Detailed rates & thresholds used in the calculation

Income tax

Personal allowance
£12,570 (tapered from £100k)
Basic rate
20% up to £50,270
Higher rate
40% from £50,271 to £125,140
Additional rate
45% above £125,140

Employee NI

8% rate band
£12,584 to £50,284
2% rate
Earnings above £50,284

Employer NI

Rate
15%
Secondary threshold
Starts above ~£5,000

Child benefit charge

Full amount
Kept up to £60,000 adjusted net income
Taper
Linear withdrawal between £60,000–£80,000