Business owners are always looking for practical, tax-efficient ways to support growth while keeping costs under control. One option that is often overlooked is employing your children within your business. When structured properly, and in line with HMRC rules, this approach can deliver financial advantages for your business, valuable experience for your children, and a sensible solution to resourcing day-to-day tasks. Below, we explore the key benefits, cost considerations, and important restrictions you need to be aware of before deciding whether this could be the right fit for your business.

Employing your children within your business can have the following benefits:

• Reduces your taxable profits: salary payments are tax deductible expenses.
• Additional resources: running a growing business whilst trying to keep on top of the administrative duties can be an overwhelming task. Having additional staff on hand to support you with these admin tasks allows you to focus on your business.
• Financially support your children: employing your children provides them with valuable work experience as well as the chance to manage their own finances.

Please note that the costs associated with employing your children will differ depending on their age.

• Children can work part-time from the age of 14 (13 in some local council areas).
• Children under 16 are not entitled to the National Minimum Wage and don’t pay National Insurance.This results in your business paying less in wages & national insurance. It also saves you time and money as their pay does not need to be included on your payroll unless their total income is over their Personal Allowance (£12,570 for 25/26).
• Young workers aged 16 to 17 are entitled to £7.55 per hour. You’ll need to record and report their pay as part of your payroll scheme, like any other employee, and complete other regular PAYE tasks if they earn more than £96 per week.
• Children cannot work full-time (max 40 hours per week) until they have reached minimum school leaving age of 16 and they must remain in part-time education or training until they are 18. For additional information on restrictions on child employment, please click here.

That said, it’s essential to ensure the work is commercially justified and as such we recommend providing a clear job description. Wages must be reasonable, in other words at market rate for the work completed. One way to enhance the justification for their pay levels is to appoint them as a director, however it is important to note that this cannot be done until they turn 16. Finally, it is important that all legal and HMRC requirements are met. Your child must be paid in line with the guidelines above, the cash must be paid to them directly and it must agree to what is on their payslip.

In summary, employing your children within your business can be a win-win arrangement when approached correctly. It can help reduce business costs, improve efficiency, and provide a tax-effective way of rewarding genuine work, while also giving your children valuable experience, responsibility, and an understanding of the value of earning their own money. With the right guidance and careful planning, employing your children can be a smart and compliant strategy that supports both your business and your family’s future. If you have any questions about employing your children, get in touch.