Tax Tip 16 : How to pay your teenage children and reduce your company tax bill

Many business owners get their children to help out in their business. For some this is sweeping the floor in the family shop, for others it is getting them to help at home with computerised work like spreadsheets or designing web pages.

If this is the case, then did you know that you can pay your child as employee of the business? This will enable them to be paid tax free (upto £6,475 p.a.) and allow the business to classify their wages as a deductable business expense. This will reduce the business tax bill. Remember that the normal rules of employment apply (contract of employment, H&S) and the work must be genuinely performed by your child. Don’t treat it as a tax dodge to pay them pocket money!

The rules on employing children under 16 are rightly very thorough – as the rights of the child must be protected. In general children under 13 cannot be employed, unless it is in theatre or television.

There are some good details here

Once your son or daughter is 16, then the national minimum wage legislation applies.

Employees aged 16 or 17 (who are older than Mandatory School Leaving Age) are entitled to £3.57 an hour, rising to £4.83 an hour for 18 to 21 year olds and £5.80 an hour for 22 year olds and over.

Your accountant will be able to advise you with specific questions.

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