ESM4040 - Particular occupations: directors

A company director holds an office. Any emoluments/earnings arising from a directorship are therefore chargeable under Schedule E/as employment income and subject to Class 1 NICs.

For tax purposes, there are two exceptions to this which are the subject of Section 6(5) ITEPA 2003 (see EIM02500 onwards)

• a `nominee’ director who satisfies various conditions (see ESM4240)
• a director who is a member of a professional partnership and satisfies various conditions. In such circumstances the director’s fees may be assessed Trading Income as part of the partnership receipts (see EIM02500 onwards).

Apart from the two exceptions described above, directors may claim that fees they receive in respect of their work for a company in which they hold office do not arise from that office and are not therefore chargeable as employment income.

For advice about directors who claim they receive fees assessable as Trading Income for acting as consultants to the company - see ESM4022.

See ESM8000 onwards regarding the possible application of the ‘personal service company’ legislation to directors of personal service companies.

This guidance should be used in conjunction with the guidance within section ESM2500- Offices.