The tax treatment of Non-Executive Directors is not always understood and could leave businesses with a tax liability if they get it wrong.

From 6th April 2013, non-execs must be treated the same as any other employee, and be paid through payroll with tax and NIC applied under PAYE rules.

Many non-execs have historically used personal service companies to receive payment for services, which they can continue to use for consultancy work outside their board role, but not for the board position itself.

This is all part of IR35 anti-avoidance, so an HMRC PAYE investigated or due diligence exercise on sale might flush this out.

If you use a personal service company at all for this type of work it’s advisable to speak to a tax specialist. Tax treatment is always subject to change.