28 Salaries and director’s fees

Any salaries and other earnings paid to employee proprietors, or director’s fees, are deductible expenses for the purposes of calculating the company’s taxable profits1.

In the hands of the recipient, the remuneration is taxable as employment income under the Income Tax (Earnings and Pensions) Act 20032. Most forms of remuneration usually count as ‘general earnings’3 under the Act, including salaries, wages and fees4, and most forms of fringe benefit5. Tax on employment income is usually collected through the PAYE system6.

The fact that directors’

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