One of the measures is to remove the need for companies to submit directors’ reports to Companies House.
 
The associated savings for companies is quoted at £230m.
 
Unfortunately, the removal of the directors’ reports from accounts will lead to no savings for our clients, as there is no cost attached to producing them in the first place, as they are part of our accountancy software suite and they are produced automatically, with no additional cost.
 
Medium sized companies will no longer have to submit strategic reports, which we do welcome,  and for medium companies, there will be a small commensurate saving, but we are struggling to see where the Chancellor has got her figures of £230m!

There are no additional changes to the tax rates for the forthcoming year. However, there were a number of announcements relating to administration of tax, including increases in penalties and interest on overdue tax.
 
There have also been announcements about Making Tax Digital for Self-Assessment with effect from April 2026.
 
All of this will place an additional burden on HMRC and in our recent experience, this organisation is now even more incompetent than ever before, so it is in our view likely that all of these changes will lead to more mistakes and wasted time for all concerned.
 
We are clearly living in difficult times but it is difficult to conclude that any recent announcements are going to help small and medium businesses, and even taxpayers, whose only requirement to file a tax return relating to let income.
 
But, in common parlance, it is what it is!
 
If you have any queries relating to these announcements, please do not hesitate to contact us.

In this free guide, we cover:
 
· Changes to employment legislation in 2025
· The true cost of hiring and onboarding
· When outsourcing specialist roles makes financial sense
· Case Studies showing outsourced success
 
Whether you’re looking to cut overheads, improve compliance or free up your time, this guide will help you make the right decisions for your business.
 
If you have any questions or would like tailored advice, our team is here to help.

In particular, they increased the rate of Employer’s National Insurance from 13.8% to 15%. However, and more importantly, they reduced the starting point from which Employer’s National Insurance becomes payable.
 
In return, they have increased the Employer’s Allowance, which is the amount of National Insurance which the Government effectively waive, to £10,500.
 
I have heard many Ministers state recently that 50% of small businesses will be better off as a result of this change.
 
We consider this to be a gross exaggeration. It is true that one or two of our clients will be better off, but only those with a small number of employees, and we consider that the amount of companies that will be better off is nearer 5% than 50%.
 
All business owners of limited companies have a certain flexibility in how to pay themselves. This can either be through salary, dividends, sometimes interest, if they have lent money to their company, or a combination of all three.
 
The difficulty we face in giving advice this year is that there is no “one size fits all”. Everybody’s circumstances are different and this means that we have to look at every single client company’s profile to come up with the best solution.
 
We give below a summary of the changes.
 
In previous years it has been recommended to pay optimum salaries up to the secondary threshold. However, in 2025/26 this threshold is only £5,000 (it was £9,100 in tax year 2024/25). While paying up to £5,000 avoids PAYE, Employee NI and Employer NI, such a low salary does not save enough in corporation tax to match the National Insurance saving.
 
For 2025/26, Directors with no other income, should look to pay themselves the optimum Directors salary of £12,570 per annum, which equates to £1,047 per month or £241 per week. Any additional income should be paid as dividends.
 
This is the most tax efficient amount for the majority of Directors to pay themselves.
 
Why?
 
The lower earnings limit for NI in 2025/26 is £6,500 per annum. A salary over this amount will count as a qualifying year for your future state pension.
 
The primary earnings limit for NI in 2025/26 is £12,570 per annum. If the annual salary exceeds this amount, then the Director will incur employee National Insurance starting at 8%.
 
The secondary earnings limit for NI in 2025/26 is £5,000 per annum. If the annual salary exceeds this amount, then the employer will need to pay NI contributions at 15%.
 
With the annual personal allowance threshold also at £12,570, on the basis that this is the main source of employment income for the Director, then there should in most cases be no PAYE incurred by the Directors on their salaries.
 
The optimum salary of £12,570 ensures that the Director qualifies for the state pension but does not need to pay any National Insurance employee contributions and PAYE.
 
Other benefits of this salary
 
A salary paid is a tax-deductible expense. With corporation rates at 19%, 25% and 26.5%, on a salary of £12,570 per Director, the company will save corporation tax of anywhere between £2,388 and £3,331. There is no such saving if dividends are paid.
 
When would a salary of £12,570 not be advisable?
 
• Where the Director has other income such as pension income, another salary, rental income, it may be advisable to pay a £nil salary.
• Where the Director has already reached the number of qualifying years for state pension.
 
Why not pay higher salaries?
 
When income exceeds £12,570 per annum, both National Insurance (employee and employer) and PAYE are applied and those combined are higher than the dividend tax rate. Even when accounting for the corporation tax reduction on the salaries, paying dividends is still more tax efficient.
 
When a higher salary than £12,570 may be appropriate
 
•  Where Directors have a contract of service, they must legally be paid the National Minimum Hourly Wage which would be higher than £12,570 per annum.
•  Dividends can only be paid out if the company has profit and loss reserves. If the company has made losses in the past, it may not be possible to pay dividends. Higher salaries may be