For national insurance purposes, Regulation 1 of the Social Security (Contributions) Regulations 2001 defines a company director as a member of a board or similar body where the company is managed by a board or similar body; or a single person where the company is managed by an individual.

Directors have to use an annual (or pro rata annual) earnings period to work out their liability for Class 1 NICs. This figure has to include all the director’s earnings when working out NICs, including fees and bonuses.

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £9,568.

The earnings period for the assessment of directors’ NICs remains an annual one. But, subject to the qualifying conditions, directors can make payments on account of directors’ NICs during the tax year based on the actual intervals of payment – usually weekly or monthly – in the same way as for other employees.

Payment of a director’s personal bills through an account with the company

Directors who have an account with their company may arrange for the company to settle their personal bills and then charge the amount to their account. If you meet a director’s personal debt in this way and then debit the amount to the account, there is liability for NICs when the:

• account becomes overdrawn or there is an increase in the amount by which it is overdrawn;

• debiting is made in anticipation of an earnings payment, for example, fees or bonuses NICs are due on the overdrawn amount or the increase in the overdrawn amount. Use the NICs rates and the earnings period which apply when the account is debited.

There is no liability for NICs if the:

• account becomes overdrawn or there is an increase in the amount by which it is overdrawn;

• debit is made in anticipation of an introduction of funds which are not earnings, for example dividends, matured insurance policies or other personal income.

HMRC CA44 guidance, National Insurance for company directors