diff --git a/hledger-lib/Hledger/Read/JournalReader.hs b/hledger-lib/Hledger/Read/JournalReader.hs
index 5e732e964..2176f3e7d 100644
--- a/hledger-lib/Hledger/Read/JournalReader.hs
+++ b/hledger-lib/Hledger/Read/JournalReader.hs
@@ -569,6 +569,7 @@ payeedirectivep = do
   lift skipNonNewlineSpaces1
   payee <- lift $ T.strip <$> noncommenttext1p
   (comment, tags) <- lift transactioncommentp
+  skipMany indentedlinep
   addPayeeDeclaration (payee, comment, tags)
   return ()
 
diff --git a/hledger/hledger.m4.md b/hledger/hledger.m4.md
index d65978032..980bd9f40 100644
--- a/hledger/hledger.m4.md
+++ b/hledger/hledger.m4.md
@@ -2309,6 +2309,8 @@ Eg:
 payee Whole Foods
 ```
 
+Any indented subdirectives are currently ignored.
+
 ## Periodic transactions
 
 Periodic transaction rules describe transactions that recur.
diff --git a/hledger/test/journal/directive-payee.test b/hledger/test/journal/directive-payee.test
new file mode 100644
index 000000000..21bc921a3
--- /dev/null
+++ b/hledger/test/journal/directive-payee.test
@@ -0,0 +1,7 @@
+# 1. payee ignores subdirectives
+<
+payee KFC
+    alias KENTUCKY FRIED CHICKEN
+    uuid 1234
+$ hledger -f - payees
+KFC