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How Can I Pay Less National Insurance?

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National Insurance. The tax that isn’t a tax.

Especially in the first few years, saving money on tax can give your business that extra money that allows you to invest in yourself.

Learn how to legally and ethically save money on your National Insurance bill.

For information about types of National Insurance and what you need to pay, click here.

How To Pay Less National Insurance

The good news is there is a limit to how much National Insurance you pay.

Admittedly, the limit kicks in at an earning level that’s higher than you might prefer.

However, I know a lot of you fabulous ambitious readers are aiming for 6, 7 or 8 figure businesses in the fullness of time. So pay attention now so you can plan 🙂

Let’s dive straight into how you can save money.

You’re A Limited Company Director

  • It’s usual to have a salary which gains you contributions to a state pension, parental leave/maternity pay, sick pay etc, and which also gives you a low or zero Class 1 National Insurance bill
  • If you do this, there is some (easy but must be done) paperwork as those tick boxes make it legal
  • For some companies, especially in the first few years, it may not be in your personal best interests to be paid a lower salary (for quite a few reasons). If you’re interested in exploring this as a client, contact me
  • If you want a mortgage in the next few years, that’s another reason to choose a higher tax bill to gain a different objective (again, let’s have a chat if that’s you)
  • The government currently has a scheme where if you meet the criteria you don’t pay the first £2k of your NI bill

You’re A Sole Trader

  • When you get to £35k pa profits for tax, explore becoming a limited company
  • If it’s right for you, you can save a lot in tax (I can help)
  • If you have a job or other income, the £35k level includes all your income, not just sole trader income
  • There are lots of reasons other than tax involved in the decision about whether to be sole trader or limited company, so take the time and investment to look at it properly. It can save a lot of problems and money later

You’re A Sole Trader Profits Under £5k

  • Small earnings exemption applies when your sole trader profits for tax are under a certain figure
  • It’s currently around the £5k mark. Contact National Insurance if this applies to you
  • You need to tell National Insurance if your earnings do, or will shortly,  go above the limit
  • It’s a grey area if you have other income other than your self-employed income, taking you above the £5k income overall
  • Contact National Insurance and tell them, but you should be able to get the exemption

You Have A Job And A Business Or Freelance

  • If you have multiple jobs or earn a lot in your job and your business, you may overpay NICs
  • One benefit to doing a self assessment tax return is if you have overpaid National Insurance, you’ll get a refund. YAY!


Need to know How To Register For Self-Employed National Insurance? Read the post here.

For How To Register As Self-Employed, read the post here.


Did you learn you could save money on your National Insurance bill?





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