Annual leave purchase calculator (holiday purchase scheme)
What buying extra holiday costs an employee per month - and what the employer saves in National Insurance when it runs through salary sacrifice.
The purchase
Standard scheme maths: a day costs annual salary ÷ 260, sacrificed from gross pay across the year. The employee also saves their own tax/NI on the sacrificed amount; the employer saves 15% Class 1 NI. Salary sacrifice must never take pay below the National Minimum Wage at the hours worked.
Buying a day of holiday costs 1⁄260th of salary, usually spread across the year through salary sacrifice - about £10 a month per day for someone on £32,000. The employee gets time they value more than the pay; the employer keeps 15% of the sacrificed salary as a National Insurance saving.
How does buying annual leave work? The holiday purchase scheme
- A window - typically once a year (often alongside benefits enrolment), employees elect to buy 1-5 extra days.
- The maths - each day costs salary ÷ 260 (working days in a year), deducted from gross pay in 12 equal instalments.
- Salary sacrifice - the deduction reduces gross pay, so the employee saves income tax and NI on it, and the employer saves 15% employer NI.
- The days - land in the leave balance like any other holiday, booked through the normal process.
What should the policy pin down?
| Decision | Common answer |
|---|---|
| Cap | 5 days a year |
| Window | one election window; changes only for life events |
| Approval | manager sign-off, coverage permitting |
| Unused bought days | refunded at year end (or carried, policy's choice) |
| Leavers | reconciled in final pay either way |
The two legal guardrails
- NMW floor: sacrifice must never drop effective pay below minimum wage at the hours worked - check with the salaried minimum wage checker.
- Statutory minimum untouched: schemes sell days ON TOP of the 5.6-week statutory minimum - the statutory floor itself can't be sold back the other way (how the 5.6 weeks works).
What about a holiday buy-back scheme?
A buy-back (or sell-back) scheme is the same idea in reverse: the employer buys unused days from the employee, usually at the end of the leave year. The second guardrail bites harder here - only days above the 5.6-week statutory minimum can ever be bought back. The statutory entitlement itself cannot be exchanged for pay while the employment continues; it can only be paid out when someone leaves. Any buy-back payment is ordinary earnings, taxed through payroll, and a scheme should say when in the year selling is allowed so it doesn't quietly become an incentive not to take leave at all.
The NI figures behind the saving are on the 2026/27 rates table.
This calculator applies the statutory rules as published and shows its working, but it cannot know your contracts, your policies or anything unusual about the case. Treat the figure as a starting point, and take advice on anything contested or expensive.
A benefit your team actually wants
CoDash's leave types and balances make bought days just work - elected, approved, booked and reconciled without a spreadsheet in sight.