Section 295: Prohibition of tax- free payments to directors.

(1) It is not lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax, or calculated by reference to or varying with the amount of his income tax, or at or with the rate or standard rate of income tax, except under a contract which was in effect at the commencement of this Act, and provides expressly, and not by reference to the articles, for payment or remuneration.
(2) Any provision contained in a company’s articles or in any contract other than such a contract as mentioned in subsection (1), or in any resolution of a company or of a company’s directors for payment to a director of remuneration as mentioned in subsection (1), shall have effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which it actually provides.
(3) This section does not apply to remuneration due before this Act comes into effect or in respect of a period before it comes into effect.