Employer NI Saving Calculator
Calculate how much your business saves in employer National Insurance through salary sacrifice — and the cost-free way to boost employee pensions.
Employer Details
Total annual employer NI saving
£263
£22/month across 1 employee
Per employee / year
£263
£22/month
NI bill reduction
7%
of total employer NI
NI Breakdown
The employer NI saving — a genuine business benefit
When employees sacrifice salary into pension, your National Insurance bill falls automatically. As an employer, you pay 15% NI on employee earnings above £9,100/year (2025/26). By reducing your employees' contractual salary, your NI liability falls in proportion.
For a business with 50 employees each sacrificing 5% of a £35,000 salary, the annual NI saving is typically over £13,000 — with zero cost reduction to employees (they also save NI themselves).
Passing the saving to employees — a win-win
Many progressive employers pass their NI saving directly into employees' pension pots. Because the saving exactly matches the cost, this costs the business nothing net — yet provides a meaningful benefit to employees.
Example: Employee sacrifices £2,000. Employer NI saving = £300. Employer contributes £300 extra to pension. Net cost to employer: £0. Employee receives £300 extra pension contribution for free.
Implementation checklist
Frequently asked questions
How much NI does an employer save with salary sacrifice?
Employers save 15% (from April 2025) on National Insurance contributions for salary above £9,100/year. So if an employee earning £35,000 sacrifices 5% (£1,750), the employer saves approximately £262 per year on that employee. With 100 employees doing the same, that is £26,200/year.
Should employers pass the NI saving back to employees?
Yes, many do — and it is a powerful recruitment and retention tool. If you pass your NI saving (15% of the sacrifice amount) into the employee's pension, it costs you nothing net. The employee gets extra pension contributions at zero additional cost to the business. It is a true win-win.
Does salary sacrifice affect payroll administration?
Salary sacrifice does require a formal variation of the employment contract and some payroll setup, but most payroll software supports it natively. Your payroll provider or pension scheme administrator can usually handle the implementation. The ongoing admin is minimal — contributions are simply calculated on the new lower salary.
Is there a limit to how much employees can sacrifice?
The annual pension allowance is £60,000 per year (2025/26), so contributions cannot exceed this. Practically, HMRC also requires that the sacrifice does not reduce an employee's salary below the National Minimum Wage. Beyond that, there is no HMRC cap on pension sacrifice.