Break-Even Calculator for UK Businesses

Last reviewed: 17 May 2026

Calculate break-even units and revenue for a UK business in pounds sterling, with HMRC-aware fixed cost guidance and contribution margin output.

Break-even units equal fixed costs divided by contribution margin per unit. Selling price minus variable cost is contribution margin. Five thousand divided by fifteen equals three hundred thirty-four units.

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 (15% above £5,000), 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 (15% above the £5,000/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 £5,000 secondary threshold costs an extra £15 — over a year on a £30k employee, that's £3,750 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.

Worked example

UK SME example — monthly figures, ex-VAT.

A small UK manufacturer has £12,000 monthly fixed costs (rent, salaries including 15% employer NI, software, insurance). Each unit sells at £40 ex-VAT with £16 of variable cost (materials, packaging, processing).

Contribution margin per unit: 40 − 16 = £24.
Break-even units: 12,000 ÷ 24 = 500 units per month.
Break-even revenue: 500 × 40 = £20,000.

Hitting exactly 500 units only covers costs with no buffer, so the owner enters a £6,000 target profit (roughly break-even plus 25%). The calculator returns (12,000 + 6,000) ÷ 24 = 750 units. That gap — 500 to survive, 750 to fund the business properly — is the real planning number. If employer NI had been left off the fixed line, the figure would have looked deceptively lower.

See the formula

See parent calculator at /break-even-calculator for the full formula reference.

Frequently Asked Questions

Should the selling price I enter include VAT?

No — use the ex-VAT price. The 20% VAT you charge is collected for HMRC and isn't your revenue, so feeding a VAT-inclusive price into the calculator overstates contribution margin and understates the break-even point. Enter the price net of VAT and the variable cost net of any reclaimable input VAT, so both sides of the contribution calculation are on the same basis.

Where does employer National Insurance go in the inputs?

Into Fixed Costs, alongside salaries. Employer NI runs 15% on pay above the £5,000 secondary threshold, so every £100 of salary above it adds £15 of fixed cost the calculator must cover before you break even. It's easy to forget on the salary line, which is why owners routinely understate fixed costs and quote a break-even point that's too optimistic.

How do I use the target profit field for a UK business?

Break-even alone leaves no buffer, so enter a target profit and the calculator returns the units needed to clear costs plus that goal. A sensible UK target is break-even plus 20-30% to fund a slow month, growth, and unexpected costs. The 'units for target profit' output tells you the real sales level the business you want actually requires, not just the survival minimum.

Which monthly costs count as fixed for a UK SME?

Rent, business rates (net of small business rate relief), salaries with employer NI, the 3% minimum employer pension, insurance, professional fees, and recurring software. Most owners underestimate this bucket because admin time and tools that 'don't really count' still appear in year-end accounts. Be brutal in the fixed-cost field — understating it is the most common reason a break-even figure proves too low in practice.

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Methodology & sources

Rates last verified: May 2026

Read the full methodology →

Standard break-even formula (Fixed Costs / Contribution Margin per Unit). Region-agnostic — only the currency symbol changes.

Rates are reviewed annually or when a region changes its headline rate. If you spot one that's out of date, email [email protected].

For information only. This calculator does not constitute financial, accounting, or tax advice. Consult a qualified professional before making business decisions.

Try these scenarios

Pre-filled examples — click any chip to load the inputs and result.

How to calculate your break-even point

Enter monthly fixed costsList rent, salaries, insurance, and any cost that doesn't change with output, then total them in the Fixed Costs field.
Add variable cost per unitMaterials, packaging, commission, and platform fees — the per-unit costs that scale with each sale.
Enter selling price per unitWhat you charge customers per unit sold.
Optionally add a target profitEnter a profit goal to see units needed to clear costs plus the target profit.
Read break-even units and chartThe chart shows the revenue and total-cost lines crossing at break-even. Round units up — you don't break even at 399 if the result is 400.

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Written by

James Blanckenberg

Founder, BusCalcTools

Founder of BusCalcTools and FinnCalc. Builds practical financial calculators for small business owners and freelancers across the US, UK, and South Africa.

Editorial review by: James Blanckenberg, Founder & Editor

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