Employing your children?

Employing your children can provide tax benefits while giving them valuable work experience. If structured correctly, it is a legitimate and tax-efficient business expense.

To qualify, the child must perform actual work for the business and receive a fair, commercial rate of pay.

Tax Benefits of Employing Your Children

Paying your child a reasonable wage is a tax-deductible expense for your business. This reduces taxable profits and lowers the business’s tax liability.

For the child, earnings are tax-free if their total income stays below the personal allowance (£11,000 at present). This means they can receive tax-free income while the business benefits from a deductible expense.

However, payments must reflect the work performed. HMRC will not accept excessive wages for minimal duties.

Regulations to Consider

When employing your children, it is essential to follow employment laws and local authority regulations, particularly if they are still in school.

• School-age children – May need a work permit from the local council.
• Minimum working age – Children can work part-time from 13, with some restrictions.
• Hours and conditions – Rules exist around working hours and school term commitments.

Failing to comply with these regulations could lead to penalties.

How We Can Help

Employing your children can be a smart tax strategy, but compliance is essential. At Lewis Brownlee, we ensure businesses follow the correct procedures while maximising tax efficiency. With leaders in the field, we are always poised to talk you through the complexities, bringing clarity and illumination as we go. So, if you have any questions or would like to find out more, do reach out. We are always happy to talk you through and see how we can help. Plus, we offer a free introductory meeting so that you can see firsthand the difference we can make before you commit!

If you need guidance on payroll, tax, or employment rules, contact us today. Our experts are here to help.