How Much Can I Salary Sacrifice? Limits, NMW Rules and the Pension Cap

Your employer cannot pay you less than the National Minimum Wage (NMW) after salary sacrifice.

For 2026/27, the National Minimum Wage for workers aged 21 and over is £12.71 an hour. That means salary sacrifice cannot reduce cash pay below the legal minimum.

For a full-time worker (37.5 hours/week), that means your post-sacrifice salary cannot drop below approximately £24,800 per year.

If you earn £110,000, the theoretical maximum sacrifice is around £85,200. In practice, your employer will likely impose a more conservative limit.

CliffGuard checks this automatically and warns you if your modelled salary sacrifice would breach the NMW floor.

Your total pension contributions (from all sources: employer, salary sacrifice, personal) cannot exceed £60,000 per year without triggering a tax charge.

However, you can carry forward unused allowance from the previous 3 tax years. If you did not max out your allowance in earlier years, you may be able to contribute more than £60,000 in one year.

For some people, the amount they can pay into pensions tax-efficiently can also be affected by:

• the tapered annual allowance (which can reduce the £60,000 limit for very high earners)
• the Money Purchase Annual Allowance (which applies if you have already flexibly accessed pension savings)

Most employers set their own limits on salary sacrifice, often as a percentage of salary (e.g. maximum 40% of gross pay). This is a contractual limit, not a legal one.

Common employer restrictions:

• Maximum percentage of gross salary (typically 30-50%)
• Minimum remaining salary (often higher than NMW)
• Annual or monthly adjustment windows only
• Requirement to maintain the arrangement for a minimum period

Check your company's benefits portal or speak to HR/payroll to understand your specific limits. If your employer does not offer salary sacrifice, a SIPP is the alternative.