How it’s calculated
For 6 April 2026 to 5 April 2027, the £12,570 allowance falls by £1 for each £2 of adjusted net income over £100,000 and is zero at £125,140. We apply the HMRC 2026/27 bands to employment income after allowance. The next-£1 tax difference shows the marginal income-tax rate: 60% within the taper in England, Wales and Northern Ireland, or 67.5% in Scotland. HMRC explains adjusted net income and pension salary sacrifice.
Worked example
For £110,000 employment income in England and £10,000 salary sacrifice, the allowance rises from £7,570 to £12,570. Income tax falls by £6,000; the take-home cost is £4,000 before any National Insurance saving, while £10,000 goes into the pension.
Before you use the result
This is an employment-income-only scenario with no other income, existing pension relief, Gift Aid or special allowances. Do not enter dividends or savings income as salary. Enter income after any existing salary sacrifice and only the additional proposed sacrifice. Pension annual allowances, minimum wage restrictions, employer agreement, NI savings, childcare eligibility and pension access rules are not assessed. A personal relief-at-source contribution is not salary sacrifice. The marginal result is forward-looking and changes at exact band boundaries.
Frequently asked questions
Why is the marginal rate 60%?
In the taper, an extra £2 of earnings attracts 80p higher-rate tax and removes £1 of allowance, adding another 40p of tax.
Does the calculator include National Insurance?
No. Savings and take-home cost are income-tax-only. NI, pension allowance limits and employer rules require separate checks.
Does Scotland have the same trap?
The allowance taper is the same, but the 45% advanced rate produces a 67.5% income-tax marginal rate within this taper.