From April 2029, pension contributions made through salary sacrifice above £2,000 a year lose their National Insurance exemption, under an Act passed in April 2026.
At 10% of pay the cost does not rise steadily with salary: at 2026/27 rates, someone with one job on £50,000 would pay £240 a year more, and someone on £60,000 would pay £80. Published 30 October 2026. Passed into law, not yet in effect when this was written: it applies from April 2029.
Each row sacrifices 10% of salary in one job. Income Tax relief is not changing, so on these assumptions the extra National Insurance comes off take-home pound for pound.
| Salary | Sacrificed a year | Extra NI a year | Take-home today | Take-home with the cap |
|---|---|---|---|---|
| £30,000 | £3,000 | £80 | £22,960 | £22,880 |
| £40,000 | £4,000 | £160 | £29,440 | £29,280 |
| £50,000 | £5,000 | £240 | £35,920 | £35,680 |
| £60,000 | £6,000 | £80 | £41,877 | £41,797 |
| £80,000 | £8,000 | £120 | £52,317 | £52,197 |
The cap brings part of what is sacrificed back into pay for National Insurance. What that part costs depends on where pay lands after the sacrifice. Employee National Insurance is charged at 8% from the primary threshold up to the upper earnings limit of £50,270, and at 2% above that limit.
On £50,000, £5,000 is sacrificed, and pay stays below the limit even with the part above the cap added back, so all of that part is charged at 8%. On £60,000, £6,000 is sacrificed, but pay is above the limit even after the sacrifice, so all of it is charged at 2%.
The turning point is about £258 a year on a salary of £52,270, where pay less the first £2,000 lands on the limit. Above that, the part straddles the limit and is charged partly at each rate, so the cost falls until pay after the sacrifice reaches the limit. Then it climbs slowly as the sacrifice grows. Near the turning point the figure could move, depending on the rules described below.
Someone in one job who sacrifices £2,000 a year or less in level amounts sees no change, at any salary. At 10% of pay, that means a salary up to £20,000. A lump such as a bonus, or a change of job part way through the year, depends on the rules still to come. HMRC estimates that 56% of employees using salary sacrifice for pensions, around 4.3 million people, stay within the limit, and 44% do not.
The Act is law, but it leaves the design and operation of the limit to regulations, and we found none made when this was written. In a letter in March 2026, the Treasury said the limit applies separately to each employment, so someone with two jobs would have £2,000 for each, unless the employers carry on business in association. The same letter said it had not yet decided whether the limit works pay period by pay period or on another basis such as an annual one, which affects people who change jobs and, on a pay-period basis, anyone whose contributions vary.
Bonuses given up for a pension count towards the limit as well as salary, and this table covers salary only.
Employers will also pay National Insurance on the part above the cap, and that cost is not in these figures. No student loan is included, and the table does not show whether repayments would change.
These are 2026/27 rates, used because they are in force today. They are not a forecast of rates in 2029.
This post concerns the whole of the UK. The table uses 2026/27 rates. The calculators on this site do not apply the cap yet, so "with the cap" is their National Insurance on the salary less the first £2,000 sacrificed. It assumes one job, level pay through the year, the contribution staying at 10% of pay, the standard National Insurance category and no student loan. Income Tax is worked on the rates for England, Wales and Northern Ireland and a 1257L tax code. Scottish take-home differs. National Insurance is UK-wide, so the extra in the table is the same in Scotland. Figures are rounded to the nearest pound.
It is an estimate, not a statement of what your payslip will show, and it is not financial advice.
Last updated 2026-11-01. Maintained by Sean Elsmore. Rates last checked against GOV.UK on 2026-09-02. Estimates are for planning and should be checked against official records where the decision matters.