Pension route guide

Salary sacrifice vs SIPP vs relief at source

Use this page when the pension amount is already clear but the funding route is not. The key comparison is whether the contribution should happen through payroll as salary sacrifice or outside payroll through a SIPP or another relief-at-source pension.

All three can affect ANISalary sacrifice can also reduce NIBest checked before payroll changes

Open salary sacrifice calculator Open pension contribution guide

Who this helps

The route-choice question this page is answering

This guide is for employees who can genuinely choose between payroll pension changes and contributions made outside payroll.

Why route choice matters even when the pension amount stays the same

When the same gross amount can be funded in different ways, the ANI outcome may be similar while the take-home cost differs. That is why route choice belongs in the same decision tree as ANI and salary sacrifice.

What this helps you decide

Salary sacrifice changes payroll

Because salary is reduced before payroll taxes, salary sacrifice often lowers National Insurance and can also change student loan deductions.

SIPP is usually a relief-at-source route

A SIPP typically works through pension tax relief outside payroll, which can still reduce ANI but does not usually create the same NI effect.

Relief at source is broader than SIPP alone

The key feature is the contribution route and tax-relief method, not the specific provider brand or wrapper label.

Threshold planning still starts from ANI

If the real problem is HICBC or the £100k taper, the contribution route should still be judged by whether it clears the relevant ANI line.

Common questions

What is the difference between salary sacrifice, SIPP, and relief at source?

Salary sacrifice reduces contractual pay through payroll, while SIPP and relief-at-source contributions are paid outside payroll and then grossed up for pension tax relief.

Do all three routes reduce adjusted net income?

They can, if they are qualifying pension contributions, but the take-home effect differs because salary sacrifice can also reduce National Insurance and payroll-based deductions.

Why compare salary sacrifice with SIPP or relief at source?

The right route depends on what matters most: payroll efficiency, contribution flexibility, provider choice, or how quickly you need the threshold reduction to show up in take-home pay.

When should I use the live salary sacrifice calculator after this guide?

Use it when the employer payroll route is genuinely available and you want to compare the real take-home trade-off rather than just the pension amount going in.

Related calculators

Use these next once route choice is the real decision

Salary sacrifice calculator

Use the live payroll comparison when salary sacrifice is genuinely available through the employer.

Pension contribution calculator UK

Use this when the amount still needs deciding before route choice becomes the final question.

Adjusted Net Income calculator

Use ANI when the contribution route matters only because it changes the threshold position.

Student loan repayment calculator UK

Use this when payroll deductions beyond tax and NI also matter to the real cash cost.

Save this setup in Seedli

Use the live payroll comparison when salary sacrifice is on the table

Seedli's salary sacrifice calculator is the right next step once employer payroll is a real option and you want the actual take-home difference.

Open salary sacrifice calculator