AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Under Article 16 of the UK-Nigeria double taxation agreement, directors' fees paid by a Nigerian company to a UK-resident board member may be taxed in Nigeria. Nigeria's 2024 withholding regulations set withholding on directors' fees paid to individuals at 15% for residents and 20% for non-residents; the UK director then reports the fee in the UK and can usually claim credit for the Nigerian tax, limited to the UK tax on the same income.
Which country taxes a director's fee
The UK-Nigeria agreement has a specific article for board members. Article 16 says directors' fees and similar payments received by a resident of one state as a member of the board of a company resident in the other state "may be taxed in that other State". For a Lagos company paying a London-based director, that means Nigeria keeps the right to tax the fee, even though the director lives and may do the work in the UK.
The UK also taxes it. GOV.UK says UK residents normally pay UK tax on all their income, including income from abroad. The double tax is dealt with by credit in the UK, explained below.
Fees for board work versus fees for other services
Article 16 covers payments for being a member of the board. If the same person is also paid for separate consulting or management work, that payment may fall under different rules. The NGEX diaspora tax guide hosted by NiDCOM says income for services physically rendered outside Nigeria is not taxable in Nigeria unless you are tax resident, but that statement is about individuals' service income in general, not board fees. Keep board fees and any service agreement separate, with separate invoices, and get advice on how each is treated.
Withholding tax in Nigeria
The Deduction of Tax at Source (Withholding) Regulations 2024, effective 1 July 2024, set directors' fees paid to individuals at 15% withholding for residents and 20% for non-residents, according to PwC Nigeria's summary. The paying company deducts it and remits it to the tax authority, now the Nigeria Revenue Service. Whether these rates have been restated under the Nigeria Tax Act 2025 is something to confirm with your Nigerian tax adviser before each payment run; we have not found new regulations replacing them.
The company should give the director a receipt or credit note showing the gross fee and the tax deducted. The UK director needs it to claim credit at home. Our Nigeria-side guide on withholding tax under the 2025 tax laws covers how deductions are filed.
UK side: reporting and foreign tax credit
The director reports the fee on a UK Self Assessment return as foreign income, converted to pounds. HMRC's helpsheet HS263 says foreign tax credit relief is the lower of the foreign tax (or the treaty-limited amount) and the UK tax on the same income. If Nigerian tax is higher than the UK tax on that fee, the excess is not credited in the UK.
Worked example
| Example step | Amount |
|---|---|
| Annual board fee agreed | ₦10,000,000 |
| Nigerian withholding at 20% (non-resident rate, 2024 Regulations) | ₦2,000,000 |
| Paid to the director | ₦8,000,000 |
| Example conversion at ₦2,000 to £1 (illustration only) | Gross £5,000; Nigerian tax £1,000 |
| UK tax on £5,000 if the director pays 40% (example) | £2,000 |
| Foreign tax credit (lower of £1,000 and £2,000) | £1,000 |
| Extra UK tax to pay | £1,000 |
For a basic-rate taxpayer at 20% in the same example, UK tax would be £1,000, the credit would be £1,000 and there would be no extra UK tax. The exchange rate in the table is invented for the arithmetic; HMRC asks you to convert at the rate when the income arose.
Paying the fee across the border
- Decide whether the fee is set in naira or in pounds. A naira fee moves with the exchange rate; a pound fee means the company carries the currency risk.
- Approve the fee by board resolution and record it, so the payment and the withholding have a clear basis.
- Agree who bears the Nigerian withholding: a "net" fee means the company grosses up and pays more.
- Keep the director's service agreement, invoices and withholding receipts together for both tax returns.
Running the board from the UK has its own duties; see director duties when running a Nigerian company from the UK and whether a Nigerian company needs a director living in Nigeria.
Where Pryme fits
A Nigerian company with a Pryme Business Account holds naira and pounds in one account, so it can deduct withholding in naira and pay the net fee in pounds to the director's UK account after converting with Business Swap; the rate and fee are shown before anyone approves. Payroll and the Finance agent prepare the run for a person to approve, and actions are recorded.
Questions people ask
Is a director's fee from a Nigerian company taxed in Nigeria if I live in the UK?
It may be. Article 16 of the UK-Nigeria treaty lets Nigeria tax directors' fees paid by a Nigerian-resident company to a UK-resident board member.
What is the withholding tax rate on directors' fees in Nigeria?
The 2024 withholding regulations set 15% for resident individuals and 20% for non-residents, per PwC Nigeria. Confirm whether this has changed under the 2025 tax laws.
Do I pay UK tax on Nigerian director fees?
Yes, if you are UK resident. You report them on Self Assessment and can usually claim credit for Nigerian tax, limited to the UK tax on the same income.
Can the company pay me in pounds?
Yes. The fee can be set and paid in pounds; withholding is still calculated on the fee and remitted in Nigeria.
Sources
- GOV.UK: 1987 UK-Nigeria double taxation agreement, in force · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- GOV.UK: Tax on foreign income, residence (updated 1 Oct 2026) · accessed Oct 2026
- HMRC HS263: Relief for foreign tax paid 2026 · accessed Oct 2026
- NiDCOM / NGEX: Diaspora guide to Nigeria's tax reforms 2026 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.