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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Corporation Tax: computation of income: directors fees received by companies: assessment

Schedule E was replaced with effect from 6 April 2003 by the provisions of the ITEPA03. The following guidance should be applied in relation to events on or after that date.

Remuneration treated under CTM02140 as income of a company to which it is handed over (the first company) should not be charged to tax as Employment Income on a director who hands it over. Instead it should be dealt with as follows in computing the liability of the first company.

Where the company is chargeable to CT, the remuneration constitutes income for CT purposes and is computed under the Employment Income rules.

Where the company is not within the charge to CT, the company is chargeable to IT in the ordinary way on the remuneration received. An example of such a company is a non-resident company which is not carrying on a trade in the UK through a branch or agency.

  • The liability to CT of a non-resident company is dealt with at CTM34210.
  • The liability to IT of a non-resident company is dealt with at CTM34220.

To ensure the correct code number is applied, contact PT Ops (see CTM02140). The correct code is:

  • NT where the first company is chargeable to CT, or
  • BR where the first company is not within the charge to CT.

Where remuneration received by a director from the second company will not be handed over to the first company the remuneration is treated as income of the director and is charged to tax on the director as Employment Income.