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HMRC internal manual

National Insurance Manual

NIM12003 - Class 1: Calculating Class 1 NICs for Directors: Definition of Director: Annual earnings period

Regulation 8 SSCR 2001

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

Regulation 8 SSCR 2001 refers to “director of a company”. “Company” isdefined in Regulation 1(2) to mean:

  • a company within Section 735 Companies Act 1985, or
  • a company within Section 718 Companies Act 1985

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

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

  • any body corporate incorporated in, and having a place of business in Great Britain, but does not include



  • any body incorporated or registered under any public general Act of Parliament, or
  • any body not formed for the purpose of carrying on a business with a view to gain, or
  • any body exempted by direction of the Secretary of State for Employment

What this means is that a director of a company, not within Sections 718 and 735Companies Act 1985, does not have an annual earnings period. Any remuneration is stillliable to Class 1 NICs because a director is an office holder and earnings periods forsuch directors will be within the normal rules for employed earners, see NIM08000.

Examples of directors of companies or bodies corporate that are not within Regulation 8are:

  • Building Societies, which have not de-mutualised.
  • Charities, but not a trading company set up by the charity
  • Non-British based foreign companies
  • Building Societies are excluded from the Companies Act because of the provisions of the Building Society Acts.
  • Any case should be submitted to Personal Tax Technical Longbenton where there appears to have been a deliberate attempt to circumvent the directors’ annual earnings period legislation.

It should be noted that the definition of a company for regulation 27 SSCR 2001(certain payments to members of professional partnerships and nominee directors) is widerthan that used for regulation 8 (see NIM12010).