The changes announced in yesterday’s Autumn Budget speech will impact businesses differently depending on their size, structure, and sector. At Triple Bottom Line Accounting, we believe in providing personalised analysis to help you understand exactly how these changes affect your specific situation.
Contents
- National Insurance Changes: Understanding the Two Components
- Impact Analysis by Company Size
- Quick Guide: Optimal Director Remuneration Strategies
- Key Decision Factors
- Other Key Budget Changes
- Why Professional Planning Is Now Critical
- Looking Beyond Tax: The Bigger Picture
- How TBLA Can Help: Your Personal Impact Assessment
- Your Next Steps
- Contact your Account Manager for a personal budget assessment
- Excellent detailed business analysis from our partners FreeAgent
1. National Insurance Changes: Understanding the Two Components
The NI changes are more complex than initially apparent, consisting of two distinct changes plus the Employment Allowance adjustment. Let’s break down each component:
Component 1: Lower Threshold
- Current threshold: £9,100
- New threshold: £5,000
- Additional earnings subject to NI: £4,100
- New rate applied to this band: 15%
- Cost per employee: £4,100 × 15% = £615
Component 2: Rate Increase on Existing Band
- Current rate: 13.8%
- New rate: 15%
- Increase: 1.2%
- For average salary of £35,000:
- Additional cost: £35,000 × 1.2% = £420 per employee
Employment Allowance Benefit
- Current allowance: £5,000
- New allowance: £10,500
- Additional relief: £5,500
2. Impact Analysis by Company Size
Small Businesses (3 employees)
- Lower threshold cost: 3 × £615 = £1,845
- Rate increase cost: 3 × £420 = £1,260
- Employment Allowance increase: -£5,500 Net effect: £2,395 saving
Medium Businesses (5 employees)
- Lower threshold cost: 5 × £615 = £3,075
- Rate increase cost: 5 × £420 = £2,100
- Employment Allowance increase: -£5,500 Net effect: £325 saving
Larger Businesses (10 employees)
- Lower threshold cost: 10 × £615 = £6,150
- Rate increase cost: 10 × £420 = £4,200
- Employment Allowance increase: -£5,500 Net effect: £4,850 additional cost
3. Quick Guide: Optimal Director Remuneration Strategies
The interaction between Corporation Tax rates and NI creates significantly different outcomes depending on company size. Here’s what you need to know:
Large Companies (Profits over £50,000)
✓ PREFER SALARY when:
- Company qualifies for Employment Allowance (needs at least 2 directors/employees)
- Corporation Tax rate is 26.5%
- Can save up to 4.93% (basic rate) or 3.31% (higher rate)
- Example saving on £20,000: £986.25 (basic rate)
Small Companies (Profits under £50,000)
✓ PREFER DIVIDENDS when:
- Corporation Tax rate is 19%
- Can save up to 2.57% (basic rate) or 4.19% (higher rate)
- Example saving on £20,000: £838.75 (higher rate)
4. Key Decision Factors
1. Company Size Matters
- Large companies: Salary more tax-efficient
- Small companies: Dividends more tax-efficient
2. Employment Allowance Critical
- Must have multiple directors/employees to qualify
- New £10,500 allowance makes salary more attractive for larger companies
3. Tax Rates Comparison
Large Companies:
- Salary route: 28% (basic) / 48% (higher)
- Dividend route: 32.93% (basic) / 51.31% (higher)
4. Small Companies:
- Salary route: 28% (basic) / 48% (higher)
- Dividend route: 25.43% (basic) / 43.81% (higher)
Remember
- These calculations assume qualification for
- Employment Allowance
Personal circumstances may affect optimal strategy - Regular review needed as tax rates and thresholds change
- Professional advice recommended for specific situations
5. Other Key Budget Changes
Making Tax Digital
- Self-employed and landlords with income over £50,000: April 2026
- Income over £30,000: April 2027
- Income over £20,000: By 2029
- Requires digital record-keeping and quarterly updates
National Living Wage
- Increasing to £12.21 per hour from April 2025
- Applies to workers aged 21 and over
- £1,400 annual increase for full-time workers
Business Rates
- Retail, hospitality and leisure relief reduced to 40%
- £110,000 per business cap
- Small business multiplier frozen at 49.9p
6. Why Professional Planning Is Now Critical
These calculations demonstrate why professional analysis is essential:
Multiple Variables
- Company profit level dramatically affects optimal strategy
- Personal tax position influences decisions
- Employment Allowance availability
- Timing of income extraction
Complex Interactions
- Corporation Tax bands
- Personal tax bands
- NI thresholds
- Employment Allowance
Required Analysis
- Detailed modelling of scenarios
- Cash flow planning
- Long-term strategy development
- Regular review and adjustment
7. Looking Beyond Tax: The Bigger Picture
As we navigate these tax changes, businesses must also consider:
- AI adoption and digital transformation
- Climate change response and sustainability
- ESG requirements and reporting
- Social responsibility expectations
- Changing workforce dynamics
8. How We Can Help: Your Personal Impact Assessment
At Triple Bottom Line Accounting, we offer the following:
Personalised Analysis
- Detailed calculations for your specific situation
- Multiple scenario modelling
- Long-term impact assessment
Strategic Planning
- Remuneration strategy optimisation
- Tax efficiency review
- Digital transformation planning
Holistic Business Support
- ESG integration
- Sustainability planning
- AI adoption strategy
- Climate change response
Please note that if a detailed analysis and report are necessary, we will quote for the cost of our time for your specific circumstances.
9. Your Next Steps
Given these complex changes, we strongly recommend:
- Scheduling a detailed planning session
- Running multiple scenarios for your specific situation
- Creating a flexible strategy that can adapt to future changes
- Regular reviews of your chosen approach
10. Contact Us
Don’t let these complex changes overwhelm you. Contact your account manager today to arrange your personal budget impact assessment. Together, we’ll ensure your business adapts to and thrives through these changes.
As your Caring, Professional, and Progressive partners, we’re here to help you navigate this changing landscape and build your business’s sustainable, prosperous future.
11. Further information and details:
For additional budget information, visit our partners at FreeAgent’s comprehensive budget update. Remember, while these examples illustrate the principles, your specific situation requires individual analysis.
Also view and comment here on Emily Cotman’s LINKEDIN post.
And if you want to look at the budget from a carbon perspective check out this blog from Carbonbrief.org.
Peter Ellington is the Founder of Triple Bottom Line Accounting. He has a Doctorate in Education and campaigns for social and environmental justice.
