Break-Even Calculator for UK Businesses

Break-even is the sales volume where total revenue equals total costs. For UK businesses: break-even units = fixed costs ÷ (price − variable cost). Fixed costs must include rent, salaries, employer NI (13.8% above £9,100), and software. HMRC's Employer Helpbook on gov.uk is authoritative for the NI inputs.

Break-even is the most-asked-for piece of management accounting in UK SMEs, because it's the one number that tells you whether your business model is geometrically capable of profit — or whether you're running a slow-motion loss-maker that needs structural change before more sales can save it.

The UK break-even calculation has three inputs: - Fixed costs (monthly): rent, salaries including employer's National Insurance (13.8% above the £9,100/year secondary threshold per employee), workplace pension contributions (3% employer minimum), software, professional fees, business rates (with small business rate relief if applicable), insurance - Variable cost per unit: COGS plus any per-unit variable cost (commission, payment processing, fulfilment) - Price per unit (ex-VAT): selling price net of the 20% VAT collected for HMRC

Break-even units = fixed costs ÷ (price − variable cost) Break-even revenue = fixed costs ÷ contribution margin %

Three observations from running this for hundreds of UK SMEs:

1. Most owners overestimate variable costs and underestimate fixed costs. Workshop tools, recurring software, and admin time that "doesn't really count" all show up in year-end accounts as fixed cost. Be brutal in the fixed-cost bucket.

2. Employer NI is a hidden margin-killer. Every £100 of payroll above the £9,100 secondary threshold costs an extra £13.80 — over a year on a £30k employee, that's £2,884 of employer NI nobody mentions on the salary line.

3. Break-even isn't the goal — break-even plus 20-30% is. A business that exactly hits break-even has no buffer for a slow month, no funds for growth, and no cushion for unexpected costs. Use the calculator's target-profit toggle to find the sales level that funds the business you actually want.

For UK-specific cost inputs (NI thresholds, small business rate relief, VAT rates), the gov.uk Employer Helpbook and HMRC's PAYE rate tables are authoritative.