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HMRC internal manual

National Insurance Manual

NIM12015 - Class 1: Calculating Class 1 NICs for Directors: Directors loan accounts and payments on account of earnings: Miscellaneous

Companies Acts

The definition of director for the purposes of annual earnings periods relies onwhether the director is a director of a company within the Companies Acts (NIM12003).

The Companies Acts provisions also need to be considered more generally. As mentioned inthe previous paragraph, if there is no service or other remuneration agreement a companyhas usually adopted Table A (Companies (Tables A-F) Regulations 1985, SI 1985/805) forremunerating directors.

The provisions of the Companies Acts are also important in other circumstances. Theydefine what records a company has to keep, form of accounts etc. Sections 282 onwardsdefine the qualifications, duties and responsibilities of directors (and companysecretaries). Sections 311 onwards contain the prohibition of tax-free payments todirectors, the need for approval by members of payments to directors for loss of officeand so on. Section 320 onwards contains the provisions for approval of the transfer ofnon-cash assets to directors. The latter provisions are of particular importance wherenon-cash remuneration avoidance schemes are used because if the transfer is not legal, theargument that there is entitlement to a cash payment is strengthened.