Hello and welcome to the site. Thank you for your question.I am sure you would agree that HMRC are likely to quiz the amount albeit it covers 8 years of back pay. As you have a constructive explanation to justify the charge in one year, there should not be a big issue.You could consider a salary as suggested and award her a bonus to reflect past performance making an annual remuneration of £10k. You will have to operate the payments through PAYE. I am aware this does mean that payments are over a longer period.Furthermore, a salary of £40k would also attract employers national insurance which is a cost worth avoiding if possible.It is legitimate to make the payment but it would be regarded as earnings in the current tax year.
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Thank you for the reply.
Just to clarify the 10k amount you mention, would be made up of 5k salary and 5k bonus?
What is the maximum bonus that I could award? Could I go over 5k?
The reason I ask is that I would prefer to not make the payment in 4 x 10k multiples as I am looking to shut the company down in the next 1-2 years. So If I made the payments in 10k multiples I would not reach 40k within the time the company will still be live.
Thank you for your help
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