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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Alternative rights of recovery (PAYE directions): primary class 1 NICs: directors: definition of a director - regulation 8 SSCR 2001

‘Director’ is further defined when deciding what earnings period should be used for a payment of earnings.

Regulation 8 SSCR 2001 refers to ‘director of a company’. ‘Company’ is defined in Regulation 1(2) to mean

  • a company within Section 735 Companies Act 1985


  • a company within Section 718 Companies Act 1985.

A company within Section 735 is one formed and registered under one of the Companies Acts (1929, 1948 to 1983 or 1985). If a company has a company registration number (CRN) it will be within Section 735.

A company within Section 718 is not registered under Section 735 but is

  • any corporate body incorporated in, and having a place of business in the UK but does not include any body
    • incorporated or registered under any public general Act of Parliament
    • not formed for the purposes of carrying on a business with a view to a gain
    • exempted by Direction by of the Secretary of State for Employment.

A director of a company not within Sections 718 or 735 Companies Act 1985 does not have an annual earnings period. Any earnings received are still liable to Class 1 NICs because the director is an office holder but the earnings periods for such directors will be within the normal rules for employed earners. Examples of such ‘directors that are not within Regulation 8’ include

  • Building Societies, which have not de-mutualised
  • charities, but not a trading company set up by the charity
  • non-British based foreign companies.

In summary, a director within Regulation 8 SSCR 2001 must have an annual earnings period (‘AEP’).

Annual earnings periods in relation to calculating primary Class 1 NICs where directorships relate to part years or involve multiple directorships is covered at COG932550 and also at NIM12021 onwards.