# What is the difference between the designations 'Director' and 'Director as Employee'?.

The difference between these two is in the way National Insurance (NI)
Contributions are calculated. Generally, a director's NI is calculated on a
cumulative basis (unlike in the case of employees where the NI is calculated for
that particular periods earnings only).



Director designated as a 'Director' : In the designation Director NI is
calculated on an ANNUAL Earnings Threshold basis i.e. until the Director earns
more than the Annual Earnings Threshold, no NI is deducted. NI will be charged
on any earnings above this limit in the normal way.



Director designated as a "Director as Employee" : In this designation the
Director is treated as an employee and his NI is calculated just like an
employee until the final month of the tax year when his NI will be adjusted to
the annual limits. In both ways the NI amount collected is the same, however
WHEN it is collected is different



More details please log on to HMRC website for a more detailed explanation.