My children are costing me a fortune in pocket money. Can I pay them through my business?
Paying your children through your business would allow you to get tax relief on the payment you make to them – saving you money. Children are subject to income tax, just like everyone else, but they do have a personal allowance of £8,105 before any tax is payable. There are a few things to consider though:-
You must actually pay the money. It’s not enough to just make a book entry.
The amount you pay must be appropriate for the work done. Don’t be tempted to pay £50 per hour for a bit of filing! You’d also need to be happy that your child has the skills necessary for the work they are doing.
There are rules as to the amount of time and type of work children can do. The rules are operated by local authorities so you’ll need to check. As a general rule employing a child aged 13 or over to do some light office work for 2-3 hours a week won’t cause a problem.
Don’t cheat! A tax inspector will soon see through your efforts to get a tax deduction when one isn’t due.
John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.
After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later.
John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.
Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.
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