SE42340 - Emoluments from offices and employments: basis of assessment - the time when an emolument is received - director’s emoluments fixed after the end of the period for which they are due

Section 202B(1)(e) and (4)-(6) and Section 203A(1)(e) ICTA 1988

If the amount of a director’s emoluments for a particular period is determined after the end of the period to which they relate, they are treated as being received, and paid, at the time the amount is determined. This rule does not apply to employees other than directors (see SE42260).

For example, a director's fees for the year ended 31 December 2000 may be fixed on a vote at the Annual General Meeting on 15 May 2001. Since determination takes place after the period for which the fees are due the date of payment is deemed to be15 May 2001.

Directors' emoluments are often determined as in the example in the previous paragraph when the shareholders fix the emoluments due at the Annual General Meeting after the year end. But emoluments can be determined on other occasions including

• when the shareholders vote remuneration at meetings other than the Annual General Meeting; this can be done pretty informally in family companies (see SE42300)
• when the director's service agreement provides for a bonus or commission if sales or profits exceed certain figures; determination will occur when the sales or profit figures are known.

The date emoluments are determined is not affected by the fact that accounts are not prepared. If the shareholders vote a specific amount of remuneration there will be a determination of the amount of the emoluments even if accounts are not prepared. But if emoluments are dependent on results see SE42350.

Note that the rules in this paragraph and at SE42330 apply when the directors' emoluments are determined. They are deemed to have been received, and paid, at that time, even if they are not actually paid or cannot be paid because of a fetter on payment. They will be deemed to have been received and paid even if no entry is made in the company's records so that the crediting rule at SE42310 does not apply.

As regards the time at which a person must be a director for this rule to apply, see SE42360.