The Hidden Tax Saving for Single Director CompaniesAre you a sole director of your own limited company? Do you follow the typical model—small salary, dividends, smart tax planning? If so, today's episode of the I Hate Numbers podcast is essential listening.
Many think the Employment Allowance is off-limits for single director companies. But with the right setup and careful planning, you could unlock over £1100 in National Insurance savings for the 2025–26 tax year.
We break down exactly how to stay legal, compliant, and cash smart—without falling foul of HMRC rules.
Main Topics & DiscussionThe Rising Cost of Employers National Insurance (NI)From 6 April 2025, employers NI increased to 15%. The point at which NI kicks in—the Secondary Threshold—also dropped to £5,000. That means you pay NI sooner and at a higher rate.
What is the Employment Allowance?The Employment Allowance lets eligible businesses reduce their employers NI bill by up to £10,500 (2025–26 figure). But single director companies usually can't claim—unless they meet specific conditions.
Two Legal Options to Unlock the Allowance1. Hire an Additional Employee* * * * Real work must be performed * * * Minimum wage rules apply * * * One week's work at £97 or more qualifies * * * Claiming the allowance saves around £1100 per year * * *
Both methods are legal, provided the setup is genuine and properly documented.
Essential Record-Keeping and Compliance* * Use reliable payroll software * * * Submit claims via HMRC’s EPS service * * * Keep payslips, employment contracts, board minutes * * * Maintain proper Company House filings if changing director structure *
Costly Mistakes to Avoid* * Assuming you're ineligible without checking * * * Faking employees to trigger the allowance * * * Missing the claim deadline for the current tax year *
Real-World ExampleA single director pays themselves £12,570. Without the Employment Allowance, they'd owe £1135 in employers NI. By meeting the conditions and claiming the allowance, that bill disappears—saving over £1100 annually.
Links Mentioned in This Episode* * Webinar: How to Handle the Rise in Employers NI in April 2025 * * * Book a Business Tax Chat *
Episode Timecodes[00:00:00] – Introduction: Who this episode is for
[00:01:17] – Rising employers NI and threshold changes
[00:02:55] – What is the Employment Allowance?
[00:04:00] – Option 1: Hiring an employee
[00:05:30] – Option 2: Restructuring directors
[00:07:08] – Legal and record-keeping requirements
[00:07:50] – Common mistakes to avoid
[00:08:47] – Next steps and helpful resources
Host & Show InfoHost Name: Mahmood Reza
About the Host: Mahmood is an accountant, tax adviser, and founder of I Hate Numbers. With decades of experience helping small businesses stay compliant and tax-efficient, he's passionate about making finance less scary—and saving businesses money.
Podcast Website:https://www.ihatenumbers.co.uk/i-hate-numbers-podcast/Listen & Subscribe to I Hate NumbersShare this episode, rate us on Apple Podcasts, and subscribe for practical tax-saving advice delivered straight to your inbox. Visit our website, follow us on YouTube, and join our mailing list for more expert guidance.