NIM12007 - Class 1: Calculating Class 1 for Directors: Fees received by other companies: Formal right to appoint a Director

Regulation 27(1) and Regulation 27(3) of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Regulations 27(1) and (3) SSCR 2001 exclude directors’ fees from Class 1 where a company has the right to appoint a director to the board of another company, by virtue of either its shareholdings in, or a formal agreement with, the second company provided that:

• the director is required to hand over to the first company any fees or other emoluments received in respect of his directorship with the second company
• the payment forms part of the chargeable profits for corporation or income tax of the first company

For information, a company may be chargeable to income tax rather than corporation tax if it is non-resident in the UK and trades through a branch or agency in the UK. If you need to know whether a company is chargeable to corporation tax, or income tax, you should contact the team dealing with the company.