What a UK company must disclose about directors’ pay depends on its size. Micro and small companies have no statutory directors’ remuneration note, although loans and guarantees to directors must always be shown and small companies may need disclosure for a true and fair view. Medium sized and large companies must give the aggregates in Schedule 5 to SI 2008/410, including highest paid director details once the total reaches £200,000, and quoted companies must also prepare a directors’ remuneration report.

Where do the rules come from?

Section 412 of the Companies Act 2006 allows regulations to require information about directors’ remuneration in the notes, covering items such as share option gains, long term incentive schemes, payments for loss of office, pension benefits and sums paid to third parties for a director’s services. Section 412(4) treats amounts paid to a person connected with a director, or a body corporate the director controls, as paid to the director. Section 412(5) puts a duty on directors, and anyone who was a director in the previous five years, to give the company the information it needs; failure is an offence punishable by a fine up to level 3 on the standard scale.

The regulations made under section 412 are Schedule 5 to the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410), applied by regulation 8 to both Companies Act and IAS accounts. Separately, section 413 requires details of advances, credits and guarantees for directors from every company, whatever its size. Who approves the pay in the first place is a different question, covered in who decides directors’ pay.

What does each size of company have to disclose?

Company Remuneration disclosure Advances and guarantees
Micro entity None required Section 413 details at the foot of the balance sheet
Small, using FRS 102 Section 1A No explicit requirement; non market terms under Schedule 1 paragraph 66; judgement for true and fair Section 413 details in the notes (paragraph 1AC.36)
Medium sized and large unquoted Schedule 5 Parts 1 and 2 aggregates, highest paid director, loss of office, third party payments Section 413 details in the notes
Quoted Schedule 5 Part 1 and a directors’ remuneration report under section 420 Section 413 details in the notes

Why do small companies not have to disclose directors’ pay?

Schedule 3 to the Small Companies Regulations (SI 2008/409), which used to require a remuneration note, was omitted by the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 with effect for financial years beginning on or after 1 January 2016. FRS 102 follows suit. Paragraph 1AC.35 requires a UK small entity to give the related party disclosures in paragraphs 33.9 and 33.14 but not paragraph 33.7, which covers key management personnel compensation. The FRC has confirmed there is no explicit FRS 102 requirement for a UK small entity to disclose directors’ remuneration.

That is not quite the end of it. The FRC points to two exceptions. Remuneration not concluded under normal market conditions must be disclosed by law under paragraph 66 of Schedule 1 to SI 2008/409, which requires particulars of material related party transactions with directors on non market terms. And because section 393 requires a true and fair view, judgement may be needed on whether further disclosure is required. The FRC also says transactions with directors that fall outside key management compensation, for example rent paid to a director, are expected to be disclosed under paragraph 33.9. See related party disclosures and the full list in notes required in small company accounts.

A small company that chooses full FRS 102 rather than Section 1A is in a different position. Paragraph 33.7 requires key management personnel compensation in total, and the exemption in paragraph 33.7A only applies where the company is subject to a legal requirement to disclose directors’ remuneration and the key management personnel and directors are the same.

What must medium sized and large unquoted companies show?

Part 1 of Schedule 5 requires:

  • the aggregate remuneration paid to or receivable by directors for qualifying services;
  • the aggregate money and net value of other assets received or receivable under long term incentive schemes, excluding shares for a company that is neither quoted nor on AIM;
  • the aggregate company contributions to money purchase pension arrangements; and
  • the number of directors accruing retirement benefits under money purchase schemes and under defined benefit schemes.

For a company that is neither quoted nor on AIM, gains on share option exercises are left out, but it must give the number of directors who exercised share options and the number who received or were entitled to shares under long term incentive schemes.

Part 2 adds four disclosures for unquoted companies:

  1. Highest paid director. Where the aggregates of remuneration, option gains and long term incentive amounts total £200,000 or more, the amount attributable to the highest paid director and that director’s pension contributions. If the director is in a defined benefit scheme, the accrued pension and any accrued lump sum at the year end. For a company that is not listed, whether that director exercised share options or received shares under a long term incentive scheme.
  2. Excess retirement benefits paid to directors and past directors beyond their entitlement when benefits first became payable or 31 March 1997, whichever is later, with an exception for properly funded schemes paying all pensioners on the same basis.
  3. Compensation for loss of office to directors or past directors, including payments on retirement and damages or settlements for breach of contract, with the nature of any non cash compensation.
  4. Sums paid to third parties for making a person’s services available as a director, such as a management charge from a parent company or an unconnected firm that provides a director. A company the director controls, or a person connected with the director, is not a third party under paragraph 5(3); amounts paid to them are treated as paid to the director under paragraph 7(3).

Medium sized companies get no relief from Schedule 5. Regulation 4 of SI 2008/410 gives them other note exemptions, but not this one.

What counts as remuneration?

Paragraph 9 of Schedule 5 includes salary, fees and bonuses, expense allowances so far as chargeable to UK income tax, and the estimated money value of benefits in kind. It excludes share options, pension contributions and benefits, and long term incentive scheme amounts, because those are disclosed separately. Paragraph 7 says the amounts include sums paid by subsidiaries or any other person, and amounts paid to connected persons and controlled bodies corporate, without double counting. Amounts are normally those receivable for the year, whenever paid. Paragraph 6 limits the duty to information in the company’s books and papers or that it has a right to obtain.

What extra applies to quoted companies?

Quoted companies give the Schedule 5 Part 1 information, including gains on share options, and must prepare a directors’ remuneration report under section 420. Section 421 lets regulations set its content and requires the remuneration policy to be set out in a separate part. Members vote on the report each year by ordinary resolution under section 439, but section 439(5) says no director’s entitlement to pay is conditional on that resolution passing. Section 439A requires a binding vote on the remuneration policy at least once in every three financial years, and sooner if the annual report vote is lost.

What does a typical note look like?

Illustration only. A private medium sized company has three directors. Their salaries, bonuses and taxable benefits total £310,000, and the company paid £24,000 into their personal pensions. Two are members of the company’s money purchase scheme. The note would show aggregate remuneration of £310,000, pension contributions of £24,000 and that two directors are accruing money purchase benefits. Because the total is over £200,000, it would also show the highest paid director’s remuneration, say £140,000, and that director’s pension contributions. If the parent company also charged £30,000 for making a fourth director available, that amount would be shown as a sum paid to third parties. The director’s tax and NIC position is separate; see directors’ National Insurance.

What mistakes come up?

  • Leaving out pay from a subsidiary or parent for services to the reporting company.
  • Leaving out fees paid to a company the director controls, which count as the director’s own remuneration.
  • Applying the £200,000 test to salary alone instead of the combined aggregates.
  • Small companies dropping section 413 details along with the remuneration note; see directors’ loan accounts.
  • Assuming the 2015 removal for small companies also removed related party disclosure of non market pay.

Reform is being discussed. The government’s Modernising Corporate Reporting consultation, open until 30 November 2026, includes a chapter on simplifying remuneration reporting. Until any change is made, the rules above apply.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.