The Inland Revenue Employment Status Manual (ESM) provides guidance on issues relating to employment status. The links to ESM below provide more information to help you to understand the terms used.

An "employee" is anyone who is gainfully employed:

• under a contract of service (also known as a contract of employment) (ESM1010), or
• as an office-holder, for example, a director (ESM2502), or
• through an agency or other third party (ESM2001), or
• for NICs purposes only, the holders of certain occupations are treated as employees. These are:
  • office cleaners (ESM4018)
  • entertainers, for example, actors (ESM4147)
  • where a husband or wife employs their spouse for the purposes of the husband's or wife's employment (ESM4155)
  • certain lecturers, teachers and instructors (ESM4503)
  • ministers of religion.

In this guidance you can assume that where we use the word "employee" we are including directors. So if we say that a benefit is chargeable on employees it will also be chargeable on directors.

Some expenses and benefits are not chargeable to tax and not liable for NICs where they are paid or provided to employees in excluded employments.