VCM25070 - Enterprise Investment Scheme (EIS): Income Tax relief: Connection with the company: Permitted payments to directors

ICTA/S291A (3); ITA/S168 (2) & (3)

In determining whether a director is a “paid director” for the purpose of VCM25060, certain payments are ignored. They are as follows:

• any payment or reimbursement of expenses which are wholly, exclusively and necessarily incurred by the director in the performance of his duties,
• any interest which represents no more than a reasonable commercial return on the amount lent,
• any dividend or other distribution which does not exceed a normal return on the amount invested,
• any payment for the supply of goods which does not exceed their market value,
• any payment of rent which does not exceed a reasonable commercial rent,
• any reasonable and necessary remuneration which:
• is paid for services rendered in the course of a trade or profession, other than secretarial or managerial services or services of a kind provided by the person to whom they are rendered, and
• is taken into account in calculating for tax purposes the profits of that trade or profession.