How it saves tax and National Insurance
Because the sacrificed amount never counts as your taxable pay, you avoid income tax (20%, 40% or 45% depending on your band) AND employee National Insurance (8% or 2%) on it. A higher-rate taxpayer typically saves 42% versus paying the same amount from net pay, and many employers add their own NI saving on top.
It can lower student-loan and the £100k trap too
Salary sacrifice reduces the income figure used for student-loan repayments, so your repayment falls. It also reduces your adjusted net income — which is exactly what gets you out of the £100,000 / 60% tax trap and can restore free childcare.
The trade-offs to weigh
Sacrifice locks the money into a pension (no access until pension age), and a lower gross salary can affect mortgage affordability, life cover, and statutory pay calculated on salary. It must not take your pay below the National Minimum Wage. For most people comfortably above those thresholds, though, the tax and NI saving makes it well worth it.