One-off payment

I have recently been appointed by a new corporate client although regrettably for me it will be ceasing business on 31 March 2011 having traded for approximately eight years. A not insubstantial cash reserve
will be distributed as part of the members’ voluntary winding-up as soon as
possible thereafter.

Historically on an annual basis the company has been paying £3 600 into one of the director’s pension policies. The usual remuneration package consists of salary of approximately £5 000 being topped up with dividends. Higher rate personal taxation has been avoided.

The company has been reasonably successful (generating annual profits well in excess of £200 000) and is considering paying a one-off additional pension contribution into the above policy of say £200 000 early in 2011 certainly before the cessation of the trade.

If allowable it will reduce the...