It is not lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or to or with any rate of income tax.

Any provision contained in a company's articles, or in any contract or in any resolution of a company or a company's directors, for payment to a director of remuneration as mentioned in paragraph (1) has effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which it actually provides.