Salary Exchange Calculator

Demonstrate the impacts of salary exchange (sometimes also known as salary sacrifice) on a client’s pension and net disposable income.

Important information

The value of investments can go down as well as up, and your clients could get back less than was originally invested. Laws and tax rules may change in the future. A client's personal circumstances and where they live in the UK will also have an impact on tax treatment.

This calculator is designed for clients who are employed and considering making a payment to a company pension plan. It can only be used where the scheme involved is occupational (net pay). It does not apply to personal pensions, stakeholder pension or SIPPs.

You can use this calculator to demonstrate to your client that instead of making the payment themselves, they may want to agree with their employer to take a reduction in their salary. The employer would then pay into the pension plan on their behalf. The result could be a larger amount paid into their pension plan.

The level of payment made by the employer could be equal to what the employee was considering making themselves.

Salary exchange isn’t right for some people.  It’s a change to their terms of employment and could affect their state benefits, other benefits such as Income Protection, or the amount they can borrow.

The possible savings are:

  • Reductions to the amount of earnings subject to income tax and Employee National Insurance (NI)
  • Savings the employer makes in Employer NI

The calculator shows how the employee has increased net disposable income whilst payments into their pension plan are maintained at the current level.