NIC – how much will the Budget cost me?

Worked examples of how a small business with 12 employees might see NIC costs increase by over £5,000

Radha runs a consultancy business in the UK (and she is the 100% shareholder in it), taking an annual salary of £30,000. The company employs 12 people including Radha. Her team are aged between 22 and 29 and are paid £32,250 (average UK wage for that group).

When profits and cashflow permit, the company pays a dividend of £10,000 each year. The company profits are £50,000, increasing by 3% (close to the inflation rate) and the current overdraft is £90,000 for which Radha provides a personal guarantee. 

Radha has put off purchasing capital and equipment needed by the company but knows this will be needed soon and she will need to raise additional finance. When visiting clients her team – where possible – uses public transport and where this isn’t possible they use a company vehicle. She currently rents premises and is eligible for small business rate relief of 33%.

GC09 AW revised costs employers NIC _ Example 1

Very small businesses with fewer than about five to six employees might actually see savings on employer NIC costs due to the increase in the employer allowance, despite the rise in the rate for the secondary rate of NICs payable by employers over the secondary threshold – which has also been decreased. See the example below with similar facts as above but with only five employees (the director has been ignored in this example for simplicity).

GC09 AW revised costs employers NIC _ Example 2