With a £5,000 gross contribution under relief at source, total pension tax relief is £2,000. Net cost to you: £3,000 (£250/month). Under salary sacrifice, the effective cost drops further to £2,900.
Use the full calculatorOn a £100,000 income you are a higher-rate taxpayer paying 40% on income above £50,270. Your marginal income tax rate is 40%.
Under relief at source, your provider claims 20% basic rate relief automatically from HMRC. You claim the additional 20% extra relief via Self Assessment — totalling £2,000 on a £5,000 contribution.
Under salary sacrifice, your gross salary is reduced by £5,000 before income tax and National Insurance are calculated. This saves you income tax and employee NI (saving an additional £100), bringing your effective net cost down to £2,900. Your employer also saves NI of £750 — some employers pass this saving into your pension.
Model your own figures — change income, contribution amount, method or region in the full calculator.
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