A director can sometimes provide genuine separate services to their company, but an invoice does not turn director remuneration into self-employed income. Start by identifying the work and the capacity in which it is performed. The tax treatment follows the facts, not the label on the bill.
Director remuneration or a genuinely separate business service?
Earnings arising from a directorship are generally employment income for tax and subject to Class 1 National Insurance, with specific exceptions. HMRC also recognises that a director may provide services in a separate capacity—for example, through an established professional business on terms similar to those offered to other customers.
Before paying an invoice, record what the service involves, how it differs from the director’s role, the commercial terms and the status analysis. Review the company’s articles and the handling of any personal interest in the transaction. Neither a written contract nor shareholder approval, by itself, settles the tax treatment. Obtain advice where the distinction is unclear or an intermediary is involved.
Before the company pays
Check the proposed service and remuneration arrangements with the company’s adviser before issuing or paying an invoice. Keep the agreed scope, commercial terms and reasons for the treatment adopted. A fair price and clear records are useful evidence, but neither makes an otherwise incorrect tax treatment valid.
