We have put together some of our best tax tips on how to save on National Insurance Contributions. How much tax can you save?

While 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 lower national insurance liability.

Seven Key Ways to Save NICs:

1.    Increasing the amount the employer contracts to contribute to company pension schemes – but watch the annual and lifetime investment limits and discuss with us if the proposed payment will bring the total for the current accounting period to more than 210% of the amount paid in the previous accounting period.

2.    Share incentive schemes (shares bought out of pre-tax and pre-NIC income) – Consider setting up an approved share scheme to allow your employees to buy shares in your company at a favourable price, which will encourage them to be more involved in the business. The employees can also benefit from low tax rates when they sell the shares.

3.    For some companies, disincorporation and instead operating as a sole trader or partnership

4.    Instead of more salary, paying a bonus to reduce employee (not director) contributions. TIP: Paying bonuses half yearly or yearly rather than monthly can save on employees National Insurances (but not for directors).

5.    Paying dividends instead of bonuses to owner directors

6.    Provision of childcare and other tax-free benefits

7.    When you take on a new employee, consider paying their removal expenses if they need to move to take up the job. The first £8,000 paid for one move is tax free, where receipts for the costs are provided.