Company Directors in Bath – How 2 Tax Changes Will Impact Your Payroll

Bath employers and company directors are advised to review their payroll and salary levels following recent tax changes, as HMRC changes bring thousands of part-time Bath workers within new National-Insurance thresholds. 

Employers and companies in Bath are now liable to pay employer’s National Insurance contributions on wages and payments they make to more than 21,600 part time workers in Bath, following two key government and HMRC changes.

Tax Changes

Prior to April 2025, employers paid National Insurance at a rate of 13.8% on salaries paid to employees above £9,100 per year. Recent changes have pushed this rate up to 15%, which is now paid on earnings above a reduced threshold of £5,000, potentially costing small business and employers thousands of pounds per year in tax.

What You Can Do

Company directors find themselves uniquely placed, with more flexibility than most employees on how they are paid. Unlike standard employees, company directors can carefully manage and structure their income as a mixture of employment salary and dividends, and the recent changes to national insurance means it is now advised for directors to revisit their payroll setup.

Company directors are also advised to check whether their company is eligible for the Employment Allowance. This is a valuable opportunity for companies, with the allowance covering up to £10,500 of employer’s National Insurance liability per year, representing a potentially significant tax savings for small business owners.

Get In Touch

At JJS Accountants, we can ensure that you are claiming the Employment Allowance, and structuring your salary as a director to optimise tax efficiency.

The above is for general guidance only and no action should be taken without obtaining specific advice.