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HMRC internal manual

Employment Income Manual

Employment income: professional remuneration: administrative practice


Where the fees are derived from the directorship of a company, see EIM02500 and EIM02501.

It is permissible to allow employment income to be treated as ordinary professional receipts within the Trading Income rules and to allow any expenses admissible under those rules. This treatment should however only be applied where all the following conditions are met:

  • there would be practical difficulties if the fees were treated as employment income
  • the duties of the office or employment (in terms of time taken) are small in relation to other practice work (of the individual or partner) that is treated for income tax as giving rise to Trading Income
  • the office or employment is in a field related to the profession and particular practice concerned (see EIM03004)
  • in a case involving a partner, there is an agreement between the partners that the fees are included as income of the partnership and pooled for division amongst the partners and that agreement is acted upon
  • the individual and any partners agree that the income should be treated for tax purposes in this manner and agree to pay tax on the fees on that basis (where appropriate as part of the partnership profits). Written confirmation should be obtained from all concerned to this effect.
  • the fees are not derived from the directorship of a company and are small in relation to the receipts of the practice generated by the individual or partner.

This practice only applies for tax purposes and has no effect for National Insurance purposes, so Class 1 NICs should be collected in the normal way.