What tax do company directors pay?

For more information go the the Inland Revenue website.

Directors or other employees who are paid wages, salaries or fees for the work they do are liable to income tax assessed as employment income. The general provision is that the company must deduct income tax from the money paid to the director, using the tax code supplied by the Inland Revenue for that individual under the terms of the PAYE (Pay As You Earn) system.

The company will also have to deduct from the director's pay the employee's National Insurance contribution and send this, with the employer's National Insurance Contribution (which the company pays) to the Inland Revenue with the deducted tax. The director's pay (and the employer's NI contribution) will be an expense of the company and so can be deducted from the company's profits, so reducing the company's corporation tax.

Related topics

• How are directors appointed?
• Are directors employees of the company?
• What tax does a company pay?
• What tax do shareholders pay?

The Inland Revenue website gives fuller details.