RD 3B Shareholders who are employees, for some companies: income other than PAYE
When this section applies


This section applies for an income year for a person who is a shareholder and an employee of a company that is not a look-through company and is a close company or has 25 or fewer shareholders if—


the person does not derive as an employee payments of salary or wages—


of a regular amount for regular pay periods of 1 month or less throughout the income year; or


that total 66% or more of the annual gross income of the person in the corresponding tax year as an employee; or


an amount is paid as income that may later be allocated to the person as an employee for the income year.

When this section does not apply


This section does not apply for an income year if it or section RD 3C did previously apply but then, for 1 of the last 3 income years, ceased to apply for the person.

Income other than PAYE


All amounts paid to the person in the income year and in later income years in their capacity as employee of the company are treated as income other than from a PAYE income payment.

Defined in this Act: amount, annual gross income, close company, employee, income, income year, pay, pay period, PAYE income payment, salary or wages, shareholder

Section RD 3B: inserted, on 30 March 2017, by section 261 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).