Many overseas groups appoint individuals based outside the UK to the board of their UK subsidiary. It is common for the same directors to sit on multiple group boards, with a few days each year spent visiting the UK subsidiary. However, the UK tax position for non-resident directors is complex and often misunderstood.
This page explains what HR, finance and payroll teams need to understand and manage when it comes to the UK tax and National Insurance Contributions (NIC) obligations for non-resident directors.
The UK tax authority – HMRC – takes a close interest in non-resident directors of UK companies. It can see who the directors are from the Companies House register and can match this against PAYE records. Failure to apply the correct tax treatment can result in:
It is essential to understand that directorship duties carried out in the UK are always taxable in the UK. Even if a non-resident director only spends a handful of days in the UK, if those days involve acting as a director of a UK company, there will be UK tax implications.
A UK company must operate PAYE on any earnings relating to UK directorship duties. This applies regardless of:
If the directorship is remunerated (even indirectly), and any duties are performed in the UK, PAYE applies.
If the UK directorship is stated to be unpaid but the director receives a salary for other roles in the group, HMRC may expect that a portion of the total remuneration is allocated to the UK directorship, especially if time is spent in the UK fulfilling those duties. This makes it essential to:
Yes, but only if a Section 690 Direction is obtained from HMRC. This allows the UK company to operate PAYE only on UK workdays, rather than 100% of the director’s income. The process:
Without a Section 690, PAYE must be operated on all of the director’s earnings.
NIC rules are separate and more nuanced:
Reimbursed travel and accommodation expenses are only tax-free if:
Where visits are regular, the UK workplace will likely be considered permanent, and expenses become taxable.
Yes. Even a single day performing directorship duties in the UK can create PAYE obligations.
Only if there is genuinely no remuneration or if the group-wide pay can be clearly allocated elsewhere. HMRC may still expect a share of pay to relate to UK duties.
No. Directors are treated differently to employees. Double tax treaties allow the UK to tax directors’ fees for services carried out in the UK regardless of duration.
We can assist you in preparing and submitting the necessary forms to HMRC.
Keep detailed records of all UK visits including dates, duties undertaken, and any expenses reimbursed.
Only in certain circumstances. We’ll help evaluate whether the workplace is temporary or permanent and whether reliefs apply.
For more about how to manage the UK tax obligations for your UK company and directors, or to discuss corporate tax residency implications, visit our corporate tax residency page.
We’re here to help you get it right. If you’re not sure you’ve got the position correct so far, we’ll help you assess the historic position and put corrections and protections in place where needed.
Senior Manager
Head of Direct Taxes
Senior Associate
Global Mobility, Personal Tax & VAT
