National insurance: your liability

Although leaving profits in the company can be tax-efficient, you need money to live on, so you should consider the best ways to extract profits.

A salary will meet most of your needs, but do not overlook the use of benefits, which may save income tax and could also result in a lower national insurance liability.
Six ways to save NICs:

• Increasing the amount the employer contracts to contribute to company pension schemes (subject to allowance not being exceeded)
• Share incentive plans (shares bought out of pre-tax and pre-NIC income)
• For companies, disincorporation and instead operating as a sole trader or partnership
• Instead of more salary, paying a bonus to reduce employee (not director) contributions
• Paying dividends instead of bonuses to owner-directors
• Provision of childcare and other tax-free benefits. 

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