Employing your children within your business can have many benefits:
- Reduces your taxable profits as the salary you pay them is a tax deductible cost to your business.
- Benefits your business – If you have a growing business and need to employ extra staff to enable you to complete all the necessary day to day tasks while continuing to grow, then employing your children as an alternative to employing another member of staff (above the age of 18) can help you achieve the above at a lesser cost and possibly less administrative tasks to your business.
- Benefits your children – Sadly, as we all know, money doesn’t grow on trees. We have to work hard for the things we need and want in life. By employing your children you will not only be helping to teach them this vital life lesson but in the process, they will be gaining valuable work experience they can put on their CV which could help them achieve future career opportunities.
I mentioned that employing your children will cost your business less when compared with employing an adult (18years+). Why is this?
The costs associated with employing your children will differ depending on their age:
- Children under 16 – Are not entitled to the National Minimum Wage (NMW) and don’t pay National Insurance (NI). This results in your business paying less in wages & NI as there is no NMW to adhere to. You can also save you time and money in the way of administrative tasks and their pay does not need to be included on your payroll unless their total income is over their Personal Allowance (£11,500 for 17/18).
- Children aged 16-17 – Young workers aged 16 to 17 are entitled to NMW of £4.00 per hour and you will also need to record and report their pay as part of your payroll scheme (like any other employee). However, the benefit here is that their NMW is still much lower than that of an adult (18+). You can find the various NMW rates here.
It should be noted that no matter what your child’s age, HMRC will want a commercial justification for the work that they are doing (i.e. you cannot over-pay them to achieve tax savings).
I understand this may sound too good to be true, however, there are also a number of restrictions that apply when employing children. These include but are not limited to:
- The minimum age a child can work part-time is 13;
- Children cannot work full-time (max 40 hours per week) until they have reached minimum school leaving age and they must remain in part-time education or training until they are 18;
- During the school term, children can only work a maximum of 12 hours per week and cannot work during school hours.
- Children cannot work before 7am or after 7pm.
For the full list of restrictions that apply to employing your children, please click here.
If you’d like to discuss employing your children in your business or other solutions for your dental practice, call us on 01872 300232 or email us at hello@hivebusiness.co.uk.
