2-minute read
A 5-question interactive decision tree for the UK 2026/27 tax year. Salary sacrifice — giving up gross pay for a pension contribution — is one of the most powerful tax-saving levers, but the optimal amount depends on income, family situation, and retirement timeline. Answer below.
Should I salary sacrifice? — decision tree
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The mathematics behind the recommendation
Effective relief rates the tree uses:
| Income band | Effective relief rate | £1 sacrificed costs |
|---|---|---|
| Below £12,570 | 0% (no tax to relieve) | £1 (no benefit) |
| £12,570 – £50,270 (basic rate) | 28% (20% IT + 8% NI) | 72p |
| £50,270 – £100,000 (higher rate) | 42% (40% IT + 2% NI) | 58p |
| £60k–£80k with 2 kids (HICBC) | ~53% (42% + ~10% HICBC) | 47p |
| £100,000 – £125,140 (60% trap) | 62% (40% + 20% PA + 2% NI) | 38p |
| Above £125,140 (additional rate) | 47% (45% IT + 2% NI) | 53p |
Sources and methodology
Rates and bands follow HMRC's published 2026/27 figures. For a personalised numerical analysis, see the salary sacrifice calculator and the full salary sacrifice framework. The methodology page documents sources.
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