Payment poser

I have a client who is the sole director and 100% shareholder of a cash-rich limited company.

Since he formed his company in 1997 his 72-year old mother has acted as company secretary but has never been paid any salary or fee for performing this role. The mother's only taxable income is a state pension of £30 per week as the main state pension is paid to
her husband.

My client has just read that the recent Budget means that a person aged 65 to 74 can earn £9 030 in the current tax year without paying tax — and he has also realised that a salary payment to someone aged 72 would not involve payment of employee's National Insurance contributions. He has therefore asked if the following arrangement is allowable.

Mother is paid a salary of £750 for each year she has acted as company...