Tax Tip

01 Nov 2019

Minimising your national insurance contribution (NIC) liability

NICs are essentially a tax on earned income. The NICs regime divides income into different classes: Class 1 contributions are payable on earnings from employment, while the profits of the self-employed are liable to Class 2 and 4 contributions.

Many strategies for saving NICs are available to business owners. An employer may wish to increase the amount they contribute to company pension schemes; make use of share incentive plans; or disincorporate and operate as a sole trader or partnership. Business owners could also opt to pay a bonus to reduce employee NICs, or pay themselves dividends instead of bonuses.

We can help you to minimise your NIC liability. Please get in touch for more information.