You joined the board from your study, and that changes the tax

A separate treaty rule for board pay. Article 15 allows America to tax directors' fees and other similar payments derived by a UK resident for services rendered there as a member of the board of a company resident in America.

So it is narrow and specific. Every element of that sentence has to hold before America gets anything.

They work together, and missing one takes the fee outside the article. The recipient must be a resident of one country, and the payment must be directors' fees or something similar to them.

The services must be rendered in the other country. And the company must itself be a resident of that other country. Both governments publish the convention and its supporting documents.

So a British resident taking fees from an American company can still fall outside, depending entirely on where the work happened.

Because it stands aside deliberately. The employment article applies subject to the directors' fees article, so board pay never enters its protection in the first place.

That matters because the short-visit exemption lives in the employment article. The day count, the paying employer and the cost-bearing conditions all belong to a provision that does not reach this fee.

So counting days tells you nothing here. A director who spends two days a year in America is in exactly the same position under this article as one who spends eighty.

So read the opening words of the employment article once. They are easy to skim past, and they decide this whole question.

This is the condition that decides most real cases, and it asks a simple physical question. The article reaches fees for services rendered in the other country, so it looks at where the director actually was while serving.

A British non-executive who attends every meeting by video from Hampshire has rendered the service in Britain. One who flies to Boston each quarter has rendered part of it in America.

So the analysis follows the person rather than the company. Where the board sits is a fact about geography, not about the register.

So diarise attendance by location from the very first meeting. The record costs nothing to keep and a great deal to rebuild.

It changes where you were, which is what the article measures. A meeting attended from Britain is service rendered in Britain, whatever the company's residence or the venue listed on the agenda.

That has become the ordinary case rather than the exception. Boards that once met in one room now meet across several, and the treaty analysis follows each person separately.

Still, check what the payer expects. Some withhold by default and ask questions afterwards, which becomes a cash problem rather than a tax one.

Hybrid boards produce a different answer for each member, and that is the correct result rather than a quirk of the drafting. The article measures where each director rendered the service.

So two directors at the same meeting can hold different positions. One dialling in from Leeds and one sitting in the New York room are not in the same place for this purpose.

Keep the attendance note per person. A minute recording only the venue answers the wrong question entirely.

Then only part of the fee engages the article, and an apportionment becomes necessary. The provision reaches fees for services rendered in the other country rather than all fees paid by a company resident there.

So a director attending two of eight meetings in America has a mixed position. Some of the service happened there and some did not.

Keep the record as you go. In our practice the apportionment is rarely difficult, and reconstructing attendance two years later usually is.

A simple meeting count is usually enough. Where board work happens between meetings, record that as well.

Yes, and it is a separate requirement from everything else. The article applies to board service for a company that is a resident of the other country, so an American company is the premise rather than an afterthought.

A UK resident sitting on the board of a British company has no business here, however much travel is involved. The article simply does not reach that arrangement.

So check residence rather than incorporation alone. The two usually coincide, they occasionally do not, and the article asks about residence.

The article covers directors' fees and other similar payments, which is wider than a line item called fees. The test looks at what the payment is for rather than at the label on it.

So a sum paid for board service under another name can still fall inside. Equally, pay for something other than board service does not become a director's fee because a director received it.

The character of the money rather than the payslip heading. The article covers directors' fees and other similar payments, so a company cannot move a fee outside it by renaming the line in its ledger.

The reverse holds too. Calling something a director's fee does not pull unrelated pay inside the article, because the question is always what the money was actually for.

This is where two articles meet in one person. Salary for executive work travels under the employment article, with its short-visit exemption available where the conditions hold.

Fees for board service travel under this one, with no such exemption. The same individual can therefore be protected on one payment and exposed on another.

So split the pay properly in the records. A single combined figure forces an apportionment later, under less favourable conditions.

Boards sometimes resist splitting the figure. It costs the company nothing and it protects the individual, so the conversation is worth having early.

Three things, and a board secretary can capture all of them without difficulty. Who attended, where they attended from, and what the fee was meant to cover.

That record serves both sides at once. It supports the director's treaty position, and it supports the company's own decision about whether to withhold.

The treaty decides whether America may tax. American domestic rules then decide the rate and the collection, and Publication 515 sets out the withholding regime that applies to payments to foreign persons.

Expect a deduction at source where the article applies. The payer generally takes tax before the fee arrives rather than leaving it to a return.

You should also expect a statement afterwards, on Form 1042-S. Our guide to reading one covers what it shows and what HMRC will want from it.

Where you take a treaty position that reduces or removes American tax, recording it formally is usually sensible rather than optional. The analysis here turns on facts that only you hold.

Our guide to treaty disclosure covers when the formal statement becomes necessary. Even where it does not, write the reasoning down while the year is fresh.

Taxes it as income of a UK resident, in full. The treaty gives America a taxing right in defined circumstances rather than taking Britain's away.

Relief then comes through the credit mechanism, capped at what the treaty permitted America to charge. So an over-deduction is recovered from the IRS rather than from HMRC.

Report the gross rather than the net. The credit comes afterwards, and reporting the net understates the income HMRC expects to see.

Not by itself, and the two questions stay quite separate. Whether a company has a permanent establishment somewhere depends on its own activity in that country, rather than on where the people round its board table happen to sit.

Still, board location is evidence about something else. Where central management and control actually happens can affect a company's residence, which is a different analysis again.

Take an illustrative case. A London-based non-executive receives 40,000 dollars a year from an American corporation and attends six board meetings.

Four happen by video from London and two in person in New York. Service for four meetings was rendered in Britain, and for two in America.

So roughly a third of the fee engages the article on those facts. The rest sits outside it, and the record of attendance is what demonstrates the split.

Notice what settled it. Attendance records, rather than the company's address, produced the apportionment.

The commonest is counting days and assuming the short-visit exemption covers the fee. It never reaches this article at all.

The second is treating the company's residence as the whole test, when where the service happened matters just as much.

After those comes the combined payment. A single figure covering salary and board service forces an apportionment that nobody documented at the time.

A fourth is assuming that no travel means no exposure at all. The fee is still UK income, whatever America does or does not take from it.

First we separate the board fee from anything else you are paid, because the two travel under different articles and need different answers. Then we map where the service was actually rendered.

Where America can tax part of it, we check the deduction against what the treaty allows. Start with our treaty relief service, or reach us through our contact page.