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HMRC internal manual

Employment Income Manual

Employment income: directors' fees received by partnerships and companies: Extra-Statutory Concession A37

Under ESC A37 certain fees may be included as Trading Income in the accounts of professional partnerships instead of being taxed as employment income (see EIM02500). Where such a request is received, the application should be dealt with by the Inspector responsible for examining the partnership accounts.

Where the conditions of paragraph 1 of the concession are satisfied, the Inspector should instruct the processing office to issue an ‘NT’ coding for the following income tax year. The current year’s coding should not be amended. The director’s fees paid in full as a result of this ‘NT’ coding will be included in the Self Assessment as Trading Income. On receipt of instructions from the technical office, the coding record for the following year should be noted for issue of an ‘NT’ coding at the appropriate time.

As regards the action needed where paragraphs 2 and 3 of the concession apply, see ESM4240 onwards.