Recent changes to National Insurance contributions may significantly affect companies with a single director on salary. Here’s what you need to know:

What Are the Changes?

• The Employers National Insurance Secondary Threshold has decreased from £9,100 to £5,000, effective from the current tax year.

Impact on Single-Director Companies:

• For the 2024/2025 tax year, if your earnings are at £758.00 per month, you would not incur any Employer or Employee National Insurance contributions. However, as a one-director employee, you are not eligible for the Employment Allowance.

Strategies to Consider:

1. Add a Second Employee:

• Hiring a second employee (even part-time) can qualify your company for the £5,000 Employment Allowance, potentially eliminating Employer’s National Insurance liabilities.

2. Adjust Salary Levels:

• Keep the director’s salary at or below the Secondary Threshold to avoid Employer’s National Insurance, supplementing income through dividends. Be cautious, as this may affect pension contributions and mortgage applications.

3. Utilise a Spouse or Family Member:

• Employing a spouse or family member who genuinely works in the business can help qualify for the Employment Allowance. Ensure that the employment is legitimate.

Stay informed and consider these strategies to optimise your financial position!