How to Pay Yourself as a CIC Director
Last updated: March 2026
Quick Answer
CIC directors can be paid — but not for being a director. You get paid for delivery work (project manager, facilitator, admin) via PAYE or self-employed invoicing. The method depends on whether the money comes from grants or trading income.
The Non-Negotiable Rules
- • You cannot be paid for director duties — governance, board meetings, voting on resolutions
- • No PAYE salary for "being a director"
- • No invoicing for director duties
- • No dividends (CICs limited by guarantee have no shares)
- • Breach = CIC Regulator action, potential deregistration or shutdown
What you can be paid for is genuine operational work. If you're doing the day-to-day delivery — running sessions, managing projects, handling administration — that's a separate role from your director duties.
Roles you can be paid for:
- Project manager or coordinator
- Workshop facilitator or session leader
- Administrator or finance officer
- Service delivery lead
- Marketing, comms, or outreach work
For more on what director duties actually include, see our CIC Directors guide.
Option 1: PAYE (Employed by Your CIC)
PAYE means your CIC employs you directly. Your CIC runs payroll, deducts income tax and National Insurance, and pays you a net salary. You'll need a payroll provider or accountant to handle Real Time Information (RTI) submissions to HMRC.
What to expect with PAYE:
- Your CIC registers as an employer with HMRC
- Monthly or quarterly payroll runs
- Your CIC pays employer National Insurance (13.8% above the threshold)
- Payroll costs (accountant or software) — typically £30–£80/month
When PAYE is the right choice:
- Your CIC earns trading or sales income (not grant-dependent)
- You have unrestricted fundraising income
- A funder explicitly requires staff to be on PAYE
There's no legal cap on CIC director pay. But in practice, salaries above ~£60,000 attract scrutiny from funders and the CIC Regulator. Your pay must be proportionate to your CIC's turnover and reasonable for the role. All director remuneration is disclosed in your annual CIC34 report — it's public information.
If you're funded by multiple grants, do not combine them into a single PAYE salary. Each grant has its own budget, reporting requirements, and audit trail. Lumping them together can breach grant agreements, trigger clawback, and in serious cases create a CIFAS fraud marker on your personal record. Keep each funding stream separate and traceable.
Option 2: Self-Employed / Freelancer Invoice
If a grant budget lists your role as "freelancer", "session worker", or "consultant", you invoice your CIC for the work rather than going on the payroll. This is common with project-based grants where the funder has specifically budgeted for external delivery.
When self-employed invoicing is correct:
- The grant budget describes your role as freelancer, consultant, or session worker
- You're delivering a specific, time-limited piece of work
- The funder has not required PAYE employment
How to invoice properly:
Funders audit invoices against bank statements and the original budget. Everything must match. Your invoice should include:
- Funder name and project name
- Grant reference number
- Your exact role wording (matching the grant budget)
- Hours worked and hourly/daily rate (matching the budget breakdown)
- Date range the work covers
At evaluation and audit, funders compare three things: the original budget, your invoices, and your bank statements. If the role title on your invoice doesn't match the budget, or the amounts don't add up, the funder can refuse to pay the final instalment or demand clawback. For more on how grant funding works, see our CIC Grants & Funding guide.
HMRC Compliance for Self-Employed Directors
If you choose the self-employed route, HMRC has specific expectations. The most important: you need to demonstrate that you're genuinely self-employed, not just avoiding PAYE.
HMRC will not accept invoicing only your own CIC as genuine self-employment. If your CIC is your sole source of income, HMRC can reclassify you as an employee — triggering backdated tax, National Insurance, and penalties.
The fix: have at least one other income source. This could be a workshop delivered for another organisation, freelance consulting, online sales, or any other legitimate self-employed income.
HMRC self-employment indicators:
- You have more than one client or income source
- You control when, where, and how you do the work
- You provide your own equipment
- You can send a substitute to do the work
- You bear financial risk (e.g. correcting unsatisfactory work at your own cost)
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Before You Pay Yourself — Checklist
Run through this before setting up any payment to yourself:
- What role am I being paid for? (It must not be director duties)
- What does the grant agreement say about how this role should be paid?
- Does my payment method (PAYE or invoice) match the grant budget wording?
- Will my invoices, bank statements, and the original budget all match at evaluation?
- If self-employed, do I have at least one other income source?
- Has the board agreed and minuted this payment arrangement?
What If Your Accountant Pushes PAYE?
This happens a lot. Your accountant recommends PAYE because it's cleaner from a tax perspective — and they're not wrong about the tax side. But accountants often don't understand CIC-specific rules or grant compliance requirements.
If a grant budget says "freelancer — 10 sessions at £200/session", that's how you need to be paid. Putting yourself on PAYE instead — even if your accountant recommends it — can breach the grant agreement. The funder wrote the budget a specific way for a reason. Always check grant terms before choosing your payment method.
This doesn't mean your accountant is wrong about everything. They're the expert on tax efficiency, National Insurance planning, and pension contributions. But on the question of how you get paid from grant money, the grant agreement takes priority over your accountant's default preference.
Frequently Asked Questions
Can CIC directors pay themselves?
Yes, but not for being a director. You can be paid for genuine operational roles — project manager, coordinator, facilitator, administrator — via PAYE or self-employed invoicing. The payment method must match your funding source and grant agreement terms.
Can I be on PAYE and self-employed for my CIC?
Yes. You can be employed via PAYE for trading income roles and invoice as self-employed for specific grant-funded project work. Many CIC directors do both. The key is that each payment method matches the funding source and grant budget wording.
How much can a CIC director earn?
There is no legal cap on CIC director pay. However, it must be reasonable and proportionate. In most CIC contexts, salaries above ~£60,000 attract scrutiny from funders and the CIC Regulator. All director pay must be disclosed in the annual CIC34 report.
Do I need to declare director pay?
Yes. All director remuneration must be declared in the CIC34 annual community interest report. This is a public document. PAYE income is also reported to HMRC through Real Time Information, and self-employed income through your Self Assessment tax return.
Can I pay myself from grant funding?
Yes, if the grant budget includes a line for your role (e.g. project coordinator, facilitator). The payment method — PAYE or freelancer invoice — must match how the role is described in the grant agreement. Paying yourself via PAYE from a grant that budgets you as a freelancer can breach the grant terms.
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