Can I employ my kids in my limited company?

kid working with laptop

Hands up if you hear “I’m booooooooooored” on repeat 24/7 from the kids during the school holidays? 

It can be mutually beneficial for you and your children to get them involved in working for your limited company. Now, of course, we’re not talking about the little little ones. Cute as they are to have around, we’re not condoning child labour here. 

What we are suggesting is giving your 13+ teenager something productive to do during their holidays or spare time, to keep them occupied and help them earn a little money. 

They could:

  • Earn some pocket money
  • Get some practical work experience under their belt
  • Take the opportunity to learn life skills that will benefit them later down the road
  • Use social media in a productive way, rather than boredom scrolling 
  • See more of what you do professionally 

Getting your kids involved is beneficial to you as a parent, but also as a business owner

It’s no wonder we get asked this question a lot, because what parent wouldn’t like their kid doing productive things during their holidays, rather than watching Netflix 24/7?  Balancing business and home life is hard enough sometimes for business owner parents, so this is a great way to blend the two – see your kids and get work done. 

From a business owner perspective, your kids could actually give you real support in areas you struggle to find time for. Let’s face it – most teenagers have pretty great social media skills that can be put to good use. They may even want to try their hand at blogging, or be a keen coder who would like to try working on your website. And we’ve suggested many times our clients get the kids using Dext to upload their receipts and expenses. 

It’s also a great way to save some tax! Adding your kids to the payroll will reduce profits and therefore the amount of corporation tax you end up paying. Win.

There are different rules for 13-14 and 15-16 year olds

During the holidays, 13-14-year olds can work up to 25 hours per week, and 15-16-year olds can work up to 35 hours. 

During term time, any child aged 13-16 is limited to working a maximum of 12 hours per week. 

Your local council may require you to apply for a child employment permit before you employ your child, so you should check on the website to be sure that you’re not in breach of child employment legislation. 

As with all employees you need to pay a fair wage for the work they are doing and the skills involved

On that note, only employ your child if they are genuinely carrying out a role. If HMRC suspect that you are paying your child in order to avoid tax you could end up with a huge fine, as well as the income being transferred to yourself and tax charged (income shifting rules).

Children aged 13-15 are not entitled to National Minimum Wage, but 16 year olds would need to be paid a minimum of  £4.55 per hour (20/21 rates).

With all employees your child will have a personal allowance, currently £12,570 for 22/23, which they can earn before they pay tax. And children under 16 do not pay National Insurance Contributions.

It’s important that you don’t end up being investigated by HMRC for employing your child and paying them a salary beyond reason. It can be difficult knowing how much to pay them, and what tasks they can and cannot do – but we can help you ensure you don’t get caught out.   Speak to us today so we can help you figure out the best steps for you and your family.