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Benefits Code II: Not Low Paid Employees |
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17A.1.2 To Whom does the Legislation Apply? |
The rules apply to directors,7 whatever their salary (since they can fix their own income), and employees whose emoluments amount to £8,500.8 ITEPA section 216 expresses this rule negatively—the provisions do not apply to someone who is not a director and who earns less than £8,500; the gain from this reformulation is hard to see the figure of £8,500 was set in 1978.9 In 1989 it was decided that employees earning over £8,500 were no longer to be described as higher paid. In 2000 person earning the minimum wage of £3.60 per hour had annual income of £7,488. If the figure of £2,000 used in 1948 when the provisions were first introduced had been adjusted in line with earnings it would, by 1992, have risen to £73,080,10 and by 2000 £87,613. |
17A.1.2.1 Director |
The term ‘director’ is not restricted to directors formally appointed as such, but extends to those in accordance with whose instructions the actual directors act—with an exception for advice in a professional capacity.11 These shadow directors are liable whether or not they hold any office or employment.12 However, there are exclusions for (a) full-time working directors who do not have a material interest in the company and (b) directors of non-profit-making bodies and charities provided, again, they have no material interest in the company.13 Such persons may, however, be employees and so be caught if their emoluments amount to £8,500 or more.14 |
A directorship is full time if the director is required to devote substantially the whole of his time to the company in a managerial or technical capacity.15 A has a material interest if A can control more than 5% of the ordinary |