Inland Revenue (IR) has recently released information setting out the tax rules which apply on fees paid to board members. The way taxation applies to any fees paid to members will depend on the personal circumstances of the individual member and the terms of their contract/appointment.


Many SME companies have employees sitting on the board of the company. In this instance, any fees paid for their service on the board will be defined as a salary, wage or an extra pay, and it will be subject to PAYE deductions.

Contractors such as independent directors

Where an individual is acting as a director and contracting to a company, any fees will be subject to a withholding tax rate of 33% (under the rules relating to schedular payments). Individuals may apply for an exemption certificate or a special tax rate certificate. An individual can elect to use their own rate which can be as low as 10%.

GST is usually excluded from these fees but this is not always the case and we advise that you seek advice on this point.

Partnerships and other entities

Where board members are required to account for payments received by another entity e.g., their employer or a partnership, different rules apply. For instance, in the case of a partnership, the “income” is likely to belong to the entity rather than any individual. In this example both the withholding tax and any GST implications will be determined by the status of the entity. In the case of a company, no withholding tax would apply.

For most board members, the rules are reasonably clear but you may wish to seek advice specific to your own circumstances.

More information is available on IR’s website here.