Directors and Their Remuneration--II

March 1966
Accountancy;Mar1966, Vol. 77 Issue 871, p178
Trade Publication
This article focuses on the amount to be paid by a company for directors' remuneration under the 1965 Finance Act in Great Britain. It is provided in paragraph 9, 18th Schedule of the act that in determining the amounts distributed by a close company for any accounting period there are to be included any amount by which the directors' remuneration paid for the period exceeds the deduction allowed for it in computing the income of the period and all distributions made in the period. In considering the amount to be paid for directors' remuneration, it will be relevant to consider whether the company may be required to distribute the standard amount provided for in Section 77 of the act. Under the terms of that Section a trading company must, after April 5, 1966, distribute its investment income and 60 percent of its estate or trading income unless it can show that it requires the money to meet its requirement or to maintain and develop its business. The amount paid to a director as remuneration is earned income in the hands of the director, while a dividend will be unearned income. A director should be voted remuneration annually in accordance with the terms of the Articles of Association of the company or in accordance with his service agreement.


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