Date posted: 19th May 2025
As you will no doubt be aware, there have been increases in employer’s national insurance from April 2025.
For an employer, there are a number of opportunities to reduce employer’s national insurance and these can be recapped here.
For a business owner, there are a number of possibilities to reduce the NIC charged on owners’ remuneration, which we have listed below with some other considerations. This is just a general overview and advice will be needed from a professional adviser.
Paying dividends instead of salary.
- Dividends need to be pro-rated between shareholders unless there is an alphabet share structure in place.
- The company needs profit reserves to pay dividends.
- The business owner should consider their national insurance position.
- There may be an impact on R&D tax relief.
- The business owner needs to ensure that they are not contracted to work for the company and thus subject to national minimum wage regulations.
Paying rent instead of salary.
- The business owner would need to have a property to rent to the company.
- Any rents paid cannot be higher than market rate.
- There may be an impact on R&D tax relief.
- The business owner should consider their national insurance position.
- The business owner needs to ensure that they are not contracted to work for the company and thus subject to national minimum wage regulations.
Paying loan interest instead of salary.
- The business owner would need to have a credit directors loan account.
- The rate of interest set should not be higher than market rate.
- Forms CT61 will be required to be completed.
- There may be an impact on R&D tax relief.
- The business owner should consider their national insurance position.
- The business owner needs to ensure that they are not contracted to work for the company and thus subject to national minimum wage regulations.
Swap a personal car for a van, electric car or high range hybrid.
- There will still be employer’s national insurance on benefits in kind.
- The tax position depends upon the vehicle chosen.
- Consider the practical use of the vehicle – is it fit for purpose? Can you take the family on days out in a van. Does the electric car have the necessary range for any travel etc?
There may be other options available, depending upon your personal circumstances. As ever, if you have any queries, please do give us a call.
