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Net Pay Arrangement Pension Calculator 2026/27

Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.

A net pay arrangement (NPA) pension deducts contributions before income tax is calculated. Full marginal-rate relief is applied automatically through payroll. No Self Assessment claim needed. This calculator shows your net cost, take-home impact and how NPA compares to relief at source.

Net Pay Arrangement Calculator

2026/27
£
£
Full gross amount going into pension
Your marginal income tax rate,
Tax relief (auto, via payroll)£,
Your net cost (NPA)£,
Net cost under relief at source£,
Extra to claim via SA if using RaS£,

How net pay arrangement works

Under a net pay arrangement, your pension contribution is deducted from gross salary before income tax is calculated. Taxable income is reduced by the full contribution. Income tax is charged on a lower figure.

Example, Fiona, salary £55,000, £5,000 pension contribution:
  • Gross salary: £55,000
  • Contribution deducted before tax: £5,000
  • Taxable income: £50,000
  • Income tax is calculated on £50,000, not £55,000
  • Tax saving: 40% on £4,730 (above basic rate at £50,270) + 20% on £270 = £1,892 + £54 = £1,946
  • Net cost of £5,000 pension contribution: £5,000 − £1,946 = £3,054
  • No Self Assessment claim needed

NPA vs relief at source: key differences

Feature Net Pay Relief at Source
Basic-rate relief Automatic through payroll Automatic via provider claim
Higher-rate relief Automatic through payroll Must claim via SA or PAYE code
Scottish rates Correct rate automatically Always 20%; claim difference via SA
Low earners (below PA) No relief, no tax to offset 20% top-up still given (up to £3,600 gross)
Self-employed Not available Standard method for SIPPs
Self Assessment needed? No (for pension element) Only if higher/additional rate taxpayer

Scottish taxpayers and net pay

NPA is the cleanest arrangement for Scottish taxpayers paying above 20%. Contributions come off salary before Scottish income tax is calculated, so the correct Scottish rate (19%, 20%, 21%, 42% or 45%) applies automatically. Under relief at source, providers always claim 20%, so Scottish intermediate (21%) taxpayers must claim the extra 1% via Self Assessment. Scottish higher (42%) taxpayers must claim 22% extra.

Take a Scottish worker in an NPA scheme at 42%: a £5,000 contribution saves £2,100 in tax, leaving a net cost of £2,900. No SA needed. Under relief at source, only £1,000 (20%) is claimed automatically. The £1,100 extra has to be claimed separately.

Compare with other methods
Salary Sacrifice Calculator Relief at Source Calculator Workplace Pension Calculator

Frequently asked questions

How do I know if my pension is a net pay arrangement?

Check your payslip. Under NPA, the pension contribution appears as a deduction that reduces your taxable pay, your income tax is calculated on the lower figure. If your taxable pay equals your gross salary (with a pension deduction after tax), you are in a relief at source scheme instead.

What if I earn below the personal allowance, do I get any relief?

Under NPA, no, there is no income tax to offset against, so no relief is applied. The government introduced a compensatory top-up from 2024/25 for NPA low earners, but delivery has been inconsistent. Under relief at source, low earners still receive the 20% top-up (up to £3,600 gross/year), making RaS more beneficial for lower earners. If you earn below the personal allowance and your scheme is NPA, speak to your employer about options.

Does NPA affect salary sacrifice?

They are separate mechanisms. Net pay arrangement is a tax relief method; salary sacrifice is a contractual pay reduction. Salary sacrifice is generally superior to NPA because it also saves National Insurance. Some employers operate salary sacrifice for some contributions and NPA for additional voluntary contributions, ask your payroll team for the breakdown.

Disclaimer: Estimates only, not financial or tax advice. 2026/27 rates.