Non-Resident Directors of UK companies: Understanding tax compliance & reporting

published on 2 June 2025 | reading time approx. 3 minutes

As global business structures become more interconnected, it is increasingly common for companies to appoint directors who are not tax residents in the UK. Whether it is to utilise expertise from overseas or appoint a senior executive from a multinational group, these Non-Resident Directors (NRDs) come with specific UK tax obligations—many of which are often overlooked. Failing to comply with HMRC's tax reporting requirements can result in penalties for both the individual director and the company. This article outlines the key obligations NRDs and UK companies need to be aware of to remain compliant and avoid unnecessary tax liabilities.

Do Non-Resident Directors need to file a UK tax return?

If you are an NRD, you may need to file a UK Self-Assessment tax return if you receive any of the following UK-source payments:

UK workdays (even just one day in the UK)
A director's fee
Reimbursed expenses
UK salary

HMRC Compliance Alert: HMRC actively reviews UK company records to identify NRDs who should be submitting tax declarations. If an NRD is earning from a UK source, HMRC expects a tax return to be filed.

Even if no tax is due, HMRC may require NRD's of UK companies to file a tax return

Why Do NRDs need to pay UK tax?

Directors are office holders – Any income or reimbursed expenses received for a directorship is taxable in the UK (HMRC Employment Income Manual - EIM20600).
No automatic tax treaty protection – Under the OECD Model Tax Convention, directors' fees are NOT protected from UK taxation in the same way as regular employment income (OECD Model Tax Convention - Article 16).
Personal allowance eligibility – NRDs who are EU nationals can still claim the UK Personal Allowance (£12,570 for 2024/25), allowing some income to be tax-free. However, they must still file a tax return even if no tax is payable.

Does the employer have a PAYE obligation?

If an NRD is earning a salary that covers multiple jurisdictions, HMRC assumes a portion of that salary relates to UK duties and expects it to be taxed in the UK.

Employer's Responsibilities:

Review the NRD's full remuneration package, including salary, bonuses, benefits, shares, and reimbursed expenses.
Identify the UK portion of their remuneration.
Run UK payroll to account for taxable earnings.

Can tax be applied only on UK earnings?

Yes, but only if a Section 690 agreement is applied. This allows tax withholding to be limited to the UK portion of the salary. If an NRD has ANY UK duties, PAYE should be considered

Reporting benefits provided to NRDs

If an NRD receives benefits such as accommodation, a company car, or private healthcare, these are taxable Benefits in Kind (BIKs) and must be reported on a P11D form. Key Deadlines:

6 July – P11D submission deadline.
22 July – Deadline to pay Class 1A NICs

National Insurance Contributions (NICs) for NRDs

By default, individuals pay social security contributions in the country where they physically work. This means that if an NRD performs work in the UK, they are liable for UK National Insurance Contributions (NICs).

However, HMRC does give a NIC concession for NRDs.

What is the NIC concession?

For NRDs of UK registered companies who only come to the UK to attend board meetings, no UK NIC will apply if:

No more than 10 board meetings are attended, AND-
These meetings last no more than 2 nights at a time. OR,
Where the director attends only 1 board meeting in a tax year, the visit can last no more than 2 weeks

Please note that this NIC concession is not extended to income tax rules, therefore an income tax liability can still arise even if the NIC concession is available.

UK tax return filing requirements for NRDs

If the NRD's remuneration has not been fully reported via PAYE, they must file a Self-Assessment Tax Return to declare their UK income. Key Deadline: 31 January following the tax year-end.