A director who is not UK resident is taxed in the UK only on earnings for duties performed in the UK, but HMRC treats attending a board meeting in the UK as a core UK duty, and the directors’ fees article in most treaties stops the short visit exemption applying. So PAYE normally runs on the UK part of the fees. Code NT is only appropriate where the director does no work in the UK at all, or HMRC accepts a treaty claim for pay earned in another capacity.

Is a non resident director taxable in the UK at all?

A directorship is an office, and fees for holding it are employment income of the individual. Section 27 ITEPA 2003 charges a non resident only on general earnings for duties performed in the UK (EIM40201). A director who lives and works abroad and never performs duties here therefore has no UK income tax charge on the fees, however large the UK company.

The difficulty is deciding what counts as a UK duty. Section 39 treats UK duties that are merely incidental to an employment carried on substantially abroad as performed abroad. HMRC’s view at EIM40203 is that this can never help a director attending a board meeting: management is vested collectively in the board, so attending a meeting in the UK, formal or otherwise, is a fundamental duty. Attending finance, strategy or personnel meetings is likely to be substantive too. Example F at EIM40204 describes a director working overseas who normally joins monthly UK board meetings by video, and says that the meetings attended in person in the UK cannot be merely incidental.

What does the directors’ fees article in a treaty change?

Most UK treaties contain a separate directors’ fees article. INTM153180 says that a resident of one country who is a director of a company resident in the other country may be taxed in that other country on their fees, meaning income received as a member of the board. UK domestic law limits the effect, because a treaty cannot create a charge that domestic law does not impose, so the UK still only taxes the UK duties element. The main practical consequence is that the short term business visitor exemption in the employment article is not available for board fees.

Earnings received in a separate capacity as an employee, such as an executive salary for operational work, remain under the ordinary employment article. Some treaties have no separate directors’ fees article and fold a similar rule into the employment article, so the wording of the specific treaty has to be checked.

When must the UK company operate PAYE?

CWG2 for 2026 to 2027 says PAYE must be operated for people working under the day to day control and management of a UK business, expressly including directors. The company must therefore deduct tax from any payment that is PAYE income. Non resident directors cannot be put into the EP Appendix 8 annual reporting scheme for short term business visitors (PAYE81950), so their fees go through the normal payroll.

Directors who work both in the UK and abroad

From 6 April 2025 section 690 ITEPA 2003 was rewritten. An employee is internationally mobile if they work both in the UK and abroad in a tax year and are, or are likely to be, non resident or in a split year. Where the employer cannot tell at the time of payment how much is PAYE income, the whole uncertain payment is treated as PAYE income unless the employer, or a person it designates, has notified HMRC of a percentage to treat as not PAYE income (PAYE81513).

The notification is made on the GOV.UK form “Tell HMRC that you’ll operate PAYE on a proportion of an employee’s income”, or on paper on request. It can only be made during the tax year concerned, it covers one employee for one tax year, and it takes effect once HMRC acknowledges receipt (PAYE81519). Directions given under the old rules stopped having effect on 6 April 2025, so a fresh notification is needed each year. HMRC treats the percentage as an estimate and expects the director to file a Self Assessment return showing the actual split (PAYE81545).

When can code NT be used?

Code NT tells the payroll to deduct no tax. CWG2 paragraph 4.6.7 says it may be used where a UK business employs someone who is non resident, is working wholly outside the UK, has not been resident in the UK before, and does not intend to and will not perform any duties in the UK. No Full Payment Submission is needed in that case and there is no National Insurance liability. If the director’s residence or place of work changes, the company must stop using code NT immediately and follow HMRC’s process for a new employee coming to work from abroad.

For a director who does visit, NT on a treaty basis is harder. PAYE81625 says it is for the employee to make and prove the double taxation relief claim before HMRC issues code NT to the employer. A non resident normally applies for relief at source on form DT Individual. Because of the directors’ fees article, such a claim will rarely succeed for board fees, though it may for separate employment earnings that meet the employment article conditions.

Different rules apply where the fees are paid to the director’s employing company or firm and taxed as its income. HMRC’s coding guidance at PAYE11010 recognises code NT for directors’ fees received by partnerships and companies; our guide to director fees paid to a company sets out when that treatment is allowed.

What about National Insurance?

National Insurance follows its own rules. NIM12013 sets out an administrative concession: a non resident director has no Class 1 liability on earnings from a UK company if they come from a country with no social security agreement with the UK, their only UK work is attending board meetings, and they either attend no more than 10 meetings in a tax year with each visit lasting no more than 2 nights, or attend 1 meeting with a visit of no more than 2 weeks. Visits cannot be averaged, the limits are not multiplied for several directorships, and the concession does not apply to anyone covered by a social security agreement. Our guide to directors’ National Insurance covers the annual earnings period.

Worked example

Illustration only. Sofia lives abroad, is not UK resident and is a non executive director of a UK company paying her £24,000 a year. In 2026 to 2027 she joins most board meetings by video from home but flies in for 4 meetings, staying 1 night each time. Her country has no social security agreement with the UK.

  • The 4 UK meetings are UK duties, so part of her fees is taxable here. Code NT under paragraph 4.6.7 is not available because she performs UK duties.
  • If the company estimates that a quarter of her duties are performed in the UK, it can notify HMRC that 75% of each payment is not PAYE income, and run PAYE on the other 25%.
  • Sofia files a Self Assessment return reporting the actual UK proportion.
  • Because she attends no more than 10 meetings and each visit is under 2 nights, the National Insurance concession applies. An eleventh meeting in the year would remove it.

What mistakes come up in HMRC checks?

  • Assuming that a director who lives abroad is outside PAYE altogether, even though they attend UK meetings.
  • Claiming treaty exemption for board fees under the employment article’s 183 day rule, which the directors’ fees article overrides.
  • Putting directors into short term business visitor arrangements; see our guide to short term business visitors for who those schemes cover.
  • Relying on a pre 2025 section 690 direction, or making the notification after the tax year has ended.
  • Applying the National Insurance concession to a director from an agreement country.
  • Forgetting that where the directors are all overseas, the location of board decisions also affects the company’s own tax residence.

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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.