NHS Salary Sacrifice Calculator 2026/27

Last updated: 8 November 2026 · Figures verified against the NHS Employers 2026/27 pay circular, the official NHSBSA pension contribution tiers and the 2026/27 tax and National Insurance rates.

By the NHS Bands Pay editorial team

Most NHS staff first meet salary sacrifice when a colleague shows off a new electric car and mentions the lease comes out of their pay before tax. The pitch sounds simple: give up £400 of gross salary, get a car, and pay less tax. The reality has more moving parts than the pitch. The sacrificed salary escapes income tax and National Insurance, which is a real saving, but it also escapes the pension scheme, which cuts both your contributions and the pension you build up, and it can drop you into a lower pension tier, which changes the maths again. A car lease also carries benefit-in-kind tax, which depends on the car, and a large sacrifice can cut maternity pay, sick pay and student loan repayments, because those are all worked out on the lower pay. This page does the full arithmetic. The calculator below works out your take-home pay before and after the sacrifice, the tax, National Insurance, pension and student loan saved, the benefit-in-kind tax on a car, and the pension you give up, using the verified 2026/27 figures for England and Wales. The guide underneath explains each scheme, works through three examples, and sets out what to check before you sign.

How salary sacrifice works

Under a salary-sacrifice arrangement your contract is varied so that you give up an amount of gross salary in return for a non-cash benefit, a leased car, a bike, or extra pension contributions. The mechanics that create the saving are straightforward. The sacrificed salary is never paid to you, so no income tax or employee National Insurance is due on it. Your employer also saves employer National Insurance, which is partly why trusts offer the schemes. Your take-home pay falls by less than the gross sacrifice, and the difference is the tax and National Insurance you did not pay.

Three things decide how much you actually save. The first is your tax band. A basic-rate taxpayer saves 20% in income tax and 8% in National Insurance on the sacrificed amount, so a £400 monthly sacrifice saves £112 a month before anything else changes. A higher-rate taxpayer saves 40% in tax, so the same sacrifice saves far more, which is why the schemes are most popular at Bands 7 and above. The second is your pension. Salary sacrifice reduces your pensionable pay, so your pension contributions fall, which saves you money each month but also cuts the pension you build up. The third is the benefit itself. A car is a taxable benefit, and HMRC charges benefit-in-kind tax on it, which eats into the saving, while a bike through cycle to work carries no benefit-in-kind tax when the scheme conditions are met.

One point catches people out. The tax and National Insurance saving is calculated on the sacrificed amount, but the pension contribution is calculated on the pay that is left. When the sacrifice drops your pension contribution, your taxable income does not fall by the full sacrifice, because the smaller pension deduction leaves more pay exposed to tax. That is why the calculator's tax saving for a Band 5 worker sacrificing £400 a month is £65.18, not the £80 that a simple 20% of £400 would suggest. The pension saving of £74.11 a month more than makes up for it in take-home terms, but it is a saving that costs pension accrual, which is the trade-off the next sections work through.

The three schemes most NHS staff use

Salary sacrifice is one mechanism with three common uses in the NHS, and they behave very differently. The car lease is the largest and most consequential, cycle to work is the smallest and simplest, and extra pension contributions sit in between, with their own rules about what can and cannot be sacrificed.

Car lease

The car lease is the scheme most staff mean when they say salary sacrifice. Your trust's fleet provider leases you a car, usually for two to four years, and the monthly payment is taken off your gross pay. The headline figure usually bundles the lease itself with fully comprehensive insurance, servicing and maintenance including tyres, breakdown cover and road tax. What it usually does not cover is electricity or fuel, parking, fines, and damage beyond fair wear and tear. When you compare with a private lease, compare the all-in cost, a private lease quote plus separately bought insurance and servicing, not the lease line alone. Our car lease salary sacrifice guide works through the comparison in full.

The tax treatment is what makes or breaks the car deal. The car is a taxable benefit, and HMRC charges benefit-in-kind tax on a percentage of the car's list price, added to your taxable income. The percentage depends on the car's CO2 emissions. Electric cars attract a very low percentage, a fraction of the rate for petrol or diesel cars, which is why NHS salary-sacrifice schemes are now dominated by electric cars. Petrol and diesel cars attract much higher percentages, which can wipe out most of the salary-sacrifice saving. The percentages change over time, and the electric-car rate is scheduled to rise gradually, so check the current percentages on GOV.UK for the year you sign, not a forum post from 2023. The calculator above takes the car's list price and benefit-in-kind percentage as inputs and works out the benefit-in-kind tax at your marginal rate, so you can see the true cost before signing.

Cycle to work

Cycle to work is the simplest scheme. You sacrifice part of your gross pay over the hire period, usually 12 months, in return for a bike and safety equipment for commuting. The saving works the same way as the car lease, tax and National Insurance on the sacrificed amount, but there is no benefit-in-kind tax when the scheme conditions are met, and the amounts are small enough that the pension effect is modest. A Band 5 worker at the top of the band (£39,043) sacrificing £100 a month for a bike saves £18.04 a month in tax, £8.00 in National Insurance, £9.80 in pension contributions and £9.00 in Plan 2 student loan repayments, so the £100 sacrifice costs £55.16 a month in take-home pay. The pension given up is £22.22 a year of retirement income, which is small next to the car-lease figures, and the bike is yours to keep at the end of the hire period, subject to a small final payment under the scheme rules. For staff who cycle to work anyway, it is the easiest salary-sacrifice decision to make.

Extra pension contributions

Extra pension contributions through salary sacrifice are offered by some trusts, and the idea is simple: you give up gross salary and the trust pays the same amount into your pension, so you save the income tax and National Insurance on it. The saving is real, but the NHS rules draw a line you need to know about. Added pension, the scheme's own way of buying extra pension, cannot be bought by salary sacrifice, per NHS Business Services Authority guidance. If your trust offers a salary-sacrifice pension arrangement, it will be an additional voluntary contribution arrangement or a similar local scheme, not added pension, and you should ask payroll exactly which arrangement it is and how it interacts with your CARE accrual before signing. The calculator treats a pension sacrifice like any other sacrifice for the take-home maths, and the pension section below explains the accrual effect, which matters more here than for any other scheme, because the whole point of the sacrifice is the pension.

Three worked examples

The table below puts three real cases side by side, all worked out with the calculator above on the verified 2026/27 figures. Each row shows the gross sacrifice, what is saved in each place, the total saving, and what the sacrifice actually costs in take-home pay. The chart plots the net cost, so you can see at a glance that the size of the sacrifice is not the size of the cost.

Read the first row and the shape of the deal is clear. A Band 5 nurse at the entry step, on £32,073 a year, sacrifices £400 a month for a car lease. The tax saved is £65.18 a month, the National Insurance saved is £32.00, and the pension contribution saved is £74.11, because the sacrifice drops her from the 8.3% pension tier to the 6.5% tier. The total saving is £171.29 a month, so the £400 sacrifice costs £228.71 a month in take-home pay. Her take-home falls from £2,040.21 a month to £1,811.50, and her pension accrual falls by £88.89 of annual retirement income for each year of the lease, or £266.67 over a three-year term.

The second row shows why higher-rate taxpayers get the better deal. A Band 7 worker at the top of the band, on £56,515, sacrifices £500 a month. The tax saved is £85.02 a month, because part of the sacrificed pay sits in the 40% band, the National Insurance saved is only £10.00, because most of the pay is above the £50,270 threshold where the National Insurance rate drops to 2%, and the pension saved is £91.39, because the sacrifice drops her from the 10.7% tier to the 9.8% tier. The total saving is £186.41 a month, so the £500 sacrifice costs £313.59 a month. Her take-home falls from £3,308.99 a month to £2,995.39.

The third row is the cycle-to-work case, and it shows how small the numbers get when the sacrifice is small. A Band 5 worker at the top of the band, on £39,043, sacrifices £100 a month for a bike, and has a Plan 2 student loan. The tax saved is £18.04, the National Insurance saved is £8.00, the pension saved is £9.80, and the student loan saved is £9.00, because the lower gross pay cuts the 9% repayment above the £29,385 threshold. The total saving is £44.84 a month, so the £100 sacrifice costs £55.16 a month, and the pension given up is £22.22 a year of retirement income.

One more example is worth working through in words, because it shows the benefit-in-kind tax doing its work. A Band 7 worker at the entry step, on £49,387, sacrifices £450 a month for an electric car with a £35,000 list price and a 2% benefit-in-kind percentage. The benefit-in-kind value is £700 a year, and at the 20% marginal rate the benefit-in-kind tax is £140 a year, or £11.67 a month. Without that tax the lease would cost £288.72 a month in take-home pay; with it, the cost is £300.39 a month, and the saving is £149.61 a month. The benefit-in-kind tax is small here because the car is electric and the percentage is low. On a petrol or diesel car with a much higher percentage, the same calculation can add tens of pounds a month, which is why the car-lease guide says the case for a petrol or diesel car through salary sacrifice is usually weak once benefit-in-kind is included.

A final reconciliation, because two figures on this site can look as if they disagree. Our car lease guide says a £400 monthly sacrifice costs a basic-rate taxpayer £288 in take-home pay, while the calculator above says £228.71 for the same Band 5 worker. Both are right. The guide's figure counts tax and National Insurance only, £80 of tax and £32 of National Insurance saved, leaving £288. The calculator also counts the pension contribution, which falls by £74.11 a month, and the tax effect of that fall, which is £14.82 a month, giving a net difference of £59.29 a month. The calculator's figure is the fuller one, but the difference is not free money: the lower pension contribution is exactly what cuts the pension accrual, so the £59.29 a month is borrowed from the retirement income, not saved.

The pension trade-off

The pension is the cost most people underestimate, because it is the only cost that does not show up on the payslip. The NHS pension is a career-average scheme, and each year of service accrues pension at 1/54th of that year's pensionable pay. Salary sacrifice reduces your pensionable pay, so the accrual falls in direct proportion: each £5,400 of annual sacrifice reduces that year's accrual by £100 of annual retirement income. A £4,800-a-year sacrifice, which is £400 a month, cuts accrual by £88.89 a year of retirement income for each year of the lease, and over a three-year lease that is £266.67 a year of retirement income given up, every year for the rest of your life, before revaluation. The built-up pension is revalued each April, so the loss compounds in the same way the pension itself does, which is why the effect matters far more for younger staff with decades of accrual ahead than for staff nearing retirement with little accrual time left.

There is a second pension effect, and it cuts both ways. Your pension contribution is a tiered percentage of your pensionable pay, set by your whole-time equivalent pay, and a sacrifice that drops your pensionable pay across a tier boundary drops your contribution rate on the whole of your pay, not just the slice above the threshold. The Band 5 worker in the first worked example drops from the 8.3% tier to the 6.5% tier, which saves £74.11 a month in contributions. That is a genuine monthly saving, and it is part of why the calculator's net cost is lower than the simple tax-and-National-Insurance figure. But it is also the mechanism that cuts the accrual, and the tier drop itself is a sign that your pensionable pay has fallen by a meaningful amount. A sacrifice that only just crosses a tier boundary can look unusually attractive in the calculator, because the whole-pay rate drop is worth more than the sacrifice itself, and that is worth checking: if a small change in the sacrifice would keep you in the higher tier, the comparison changes.

One more pension point, for staff who sacrifice into extra pension contributions rather than a car or a bike. The sacrificed amount goes into the pension, so the trade-off is different: you are not losing pension accrual in the same way, because the contribution itself is the benefit. But the CARE accrual on your main scheme pension still falls, because it is based on the reduced pensionable pay, and the extra contribution goes into a separate arrangement with its own rules. Added pension, the scheme's own way of buying extra pension, cannot be bought by salary sacrifice, so if your trust offers a salary-sacrifice pension arrangement, ask payroll exactly which arrangement it is, how it interacts with your CARE accrual, and whether the employer's 23.7% contribution applies to it, before you sign. The pension contributions guide and the contributions by band guide set out the tiers and the accrual rules in full.

What else changes when you sacrifice salary

The pension is the largest hidden cost, but it is not the only one. Salary sacrifice changes every calculation that starts from your pay, and some of those matter more than the tax saving.

Maternity and family leave come first, because the effect is large and the timing is unforgiving. Statutory Maternity Pay and occupational NHS maternity pay are based on your average weekly earnings, and salary sacrifice reduces the earnings those calculations use. A large sacrifice taken shortly before the qualifying week can cut Statutory Maternity Pay and can affect the earnings tests for benefits. Occupational NHS maternity pay is based on average weekly earnings too, so the same reduction applies. If family leave is on the horizon, work out the effect with the calculator above and check the position with your trust payroll team before signing, because the sacrifice cannot be undone for the qualifying period once it has started.

Sick pay works the same way. Occupational NHS sick pay is based on what you would have earned, which is the post-sacrifice figure, so a long absence on sick pay is paid on the reduced salary. Student loan repayments fall, which is a saving, but a small one: a Band 5 worker at the top of the band on Plan 2 pays £72.44 a month, and sacrificing £100 a month for a bike cuts that to £63.44, a saving of £9.00 a month. Mortgages and credit are assessed on the reduced salary, which can lower how much you can borrow, so if you plan to move house during the lease, factor that in before you sign. And the National Minimum Wage sets a floor: your pay cannot be sacrificed below it, which caps the size of sacrifice available to lower-paid staff. A Band 2 worker on £25,272 sacrificing £200 a month saves £37.40 a month in tax, £16.00 in National Insurance and £13.00 in pension contributions, so the £200 sacrifice costs £133.60 a month in take-home pay, a saving of £66.40 a month. At Bands 2 and 3 the deal is thinner, and a cheap used car bought outright is often the better use of the money.

Leaving the NHS is the risk that turns a good deal into an expensive one. Resignation, redundancy or moving to an employer that does not run the scheme normally ends the arrangement early, and early-termination fees can run to several months of payments, on top of losing the car. Only sign if you expect to stay in post for the full term. Most schemes allow limited early-exit provisions for events such as long-term sickness, but the default is that you are committed for the term, so read the termination clause in your scheme's documentation before signing. The car lease guide sets out the risks in full, including the family-leave and credit effects.

Scotland and Northern Ireland

The calculator on this page uses the England and Wales figures, and it does not apply in Scotland or Northern Ireland, because both run their own tax or pension arrangements. Scotland has its own income tax bands: the starter rate is 19% on taxable income up to £16,537, the basic rate is 20% to £29,526, the intermediate rate is 21% to £43,662, the higher rate is 42% to £75,000, the advanced rate is 45% to £125,140, and the top rate is 48% above that, all on top of the same £12,570 personal allowance. Scotland also has its own nine-tier pension structure, from 5.7% to 12.7%, with different thresholds from the England and Wales tiers, and the employer contributes 22.5% rather than 23.7%. The principle is the same, tiered contributions and tax relief before income tax, but the numbers differ, so a Scottish worker who runs the calculator above will get the wrong answer. Our Scotland pay guide covers the Scottish arrangements.

Northern Ireland uses the same income tax and National Insurance rates as England and Wales, but its own pension contribution rates through the HSC Pension Service: 5.2%, 6.7%, 8.5%, 10.0%, 10.9% and 12.7%, on the same thresholds as England and Wales, with the employer contributing 23.2%. The difference is small in most cases, a Band 5 worker pays 8.5% where the England equivalent pays 8.3%, and 10.0% at the top where England pays 9.8%, but it is enough to change the pension saving in the calculator, so Northern Ireland staff should treat the figures above as a guide and confirm the exact position with their HSC Trust payroll team. The Northern Ireland pay guide sets out the HSC position, including the 2026/27 award, which has not been implemented there.

Before you sign

Salary sacrifice is a contract variation, not a purchase, and it deserves the same care as any other change to your employment terms. Before you sign, get the post-tax monthly cost in writing, and check it against the calculator above: if the scheme's figure and the calculator's figure differ by more than a few pounds, ask why, because the difference is usually a pension or benefit-in-kind assumption you have not been told about. Confirm the early-termination fees, and work out what leaving after a year would cost, not just what completing the term costs. Check the benefit-in-kind percentage for the specific car, on GOV.UK, for the year you sign, and run the calculator with that percentage, not the one from a forum post or an old quote. Estimate the pension accrual you are giving up, using the 1/54th rule, and decide whether the car or bike is worth that much retirement income. And get a private lease comparison quote for the same car and term, so you are comparing the post-tax cost of the scheme against the real alternative, not against the headline lease figure. If the scheme still wins after all five checks, it is a good deal for you, which is the only test that matters. For the car scheme in detail, see the car lease salary sacrifice guide, and for how the deductions look on a payslip, see the payslip guide.

Sources and independence

Source: NHS Employers, NHS PRB pay award announcement 2026 (Agenda for Change 2026/27 pay scale).

Source: NHS Business Services Authority, NHS Pensions member hub (2026/27 contribution tiers and added pension rules).

Source: GOV.UK, Income Tax rates and Personal Allowances, National Insurance rates, Repaying your student loan and Tax on company cars (benefit-in-kind).

Source: NHS Employers, Unsocial hours payments (Agenda for Change Section 2 rates, for the pensionable-pay definition used by the calculator).

NHS Bands Pay is an independent guide and is not affiliated with the NHS, NHS Business Services Authority or HMRC. Figures were verified against the official sources above on 8 November 2026 and can change, always confirm with the relevant official body before making financial decisions. The calculator is an estimate only: always check your contract, ESR record and payslip for your actual figures.