Income Tax Act 2007 section 168

Directors excluded from connection

Section 168 explains when a director (or their associate) of the issuing company is not treated as connected with that company for the purposes of EIS relief, and which types of payments can be disregarded when making that assessment.

• Being a director alone does not make an individual connected with the issuing company — connection only arises if the director or associate receives (or is entitled to receive) payments from the company or a related person during the relevant period
• Certain routine payments are disregarded, including reimbursed directors' expenses, reasonable commercial interest on loans, normal-return dividends, market-value payments for goods, fair commercial rent, and necessary remuneration for trade or professional services
• Remuneration for services is only disregarded if those services are provided as part of a UK trade or profession (excluding secretarial, managerial, or services of the same kind the recipient already provides) and the remuneration is included in the taxable profits of that trade or profession
• A "related person" includes any subsidiary or partner company of the issuing company where the individual or associate is a director, as well as any person connected with those companies; a "subsidiary" means a company that was a 51% subsidiary of the issuing company at any time during period A