Calculator user guide

Output

Select Basic or Detailed from the dropdown menu. These show on-screen as:

Basic - a snapshot of the before / after salary exchange results. The summary shows your employee's net take-home pay, the total cost to you which includes your employee's salary and levels of pension contribution.

Detailed – as above but includes the additional detail of income tax and national insurance figures.

Employee name

Enter your employee's full name

Employer name

Enter your business name

Yearly salary

This field is compulsory. Enter your employee's gross annual salary - the £ sign can be omitted.

Yearly employee contribution

This field is compulsory. Enter your employee's annual gross pension contribution - the £ sign can be omitted. This is a monetary amount, not a percentage, and represents the amount of salary your employee wishes to exchange.

Employee contribution method

Select either Net or Gross from the dropdown menu.

Select Net if your scheme is a Group Personal Pension. Income tax and National Insurance contributions are calculated on your employee's gross salary before the net pension contribution is deducted.

Select Gross if your scheme is an Occupational Pension Scheme. Income tax and National Insurance contributions are calculated after the deduction of your employee's gross pension contribution. Tax relief is therefore provided at source.

Yearly employer contribution

This field is compulsory. Enter the annual gross pension contribution you wish to pay into your employee’s pension plan. This is a monetary amount, not a percentage. If you’re not paying any contributions before the exchange, leave as £0.00.

Tax allowance

This field is compulsory. Enter your employee's personal allowance for the current tax year - the £ sign can be omitted. If your employee has an allowance higher or lower than the standard amount of £12,500, this can be entered. 'K' tax codes should be input as a negative allowance - e.g. K310 should be entered as '-3100'.

Tax regime

Select UK (exc Scotland and Wales) or Wales or Scotland from the dropdown menu depending upon the tax regime that applies to the customer.

Convert employee savings

If you want your employees NIC savings to be invested in their pension plan select YES. If not, select NO.

If you select NO:

  • Your employee’s NIC savings, generated through exchanging salary are not converted to pension contributions. 
  • Your employee's gross annual salary will reduce by the amount of salary being exchanged. Their take-home pay will increase as they're paying less income tax and National Insurance contributions.
  • As your employee's gross annual salary will reduce by the amount of the exchange, your cost will also reduce as you’ll pay less National Insurance contributions.
  • The total value of pension contributions will be the same as before the exchange, and you pay the full pension contribution.

If you select YES:

  • Your employees NIC savings, generated through salary exchanging, are converted to pension contributions.
  • Your employee's gross annual salary will reduce and their take-home pay will stay the same.
  • As your employee's gross annual salary will reduce, your costs will also reduce as you’ll pay less National Insurance contributions.
  • Pension contributions increase as savings are redirected to the employee's pension plan. You pay the full pension contribution.

Convert % of employer savings

This field is compulsory, and you can only enter a percentage between 0 and 100. The % sign can be omitted.

If you key in:

  • 0 – you’ll keep all of your National Insurance savings and redirect none back into your employee's pension plan.
  • 100 - you’ll pay all of your National Insurance savings into your employee’s pension plan. Your employee's pension contribution increases in line you’re your National Insurance saving.
  • 50 - for example. You’ll keep half of your National Insurance savings and invest the other half in your employee’s pension plan.

Calculate button

Once you’ve completed and checked all of the fields, select ‘Calculate’ to see the output.

Clear button

If you need to delete all input fields select ‘Clear’.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.