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These questions are about employing family members-i.e. teenagers

Resolved Question:

These questions are about employing family members-i.e. teenagers to help in the business. What are the rules under payroll? What is allowed as a tax deductible expense either as a Sole-trader or as a Limited Company? Thanks, CAS
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I'm Keith and happy to help you with your question.

In basic terms the wages and Employer's National Insurance Contributions (if any).

Travel expenses reimbursement when undertaking duties of the business may also be deductible, but this does not include any payments for residence to place of duty. Remember an employee can only have one 'place of duty.' If sent anywhere else the expense is allowable.

Special clothing, uniforms or protective gear are also deductible.

Any expenditure necessary in the employment of the employee is permissible, but beware if training costs are involved ie professional training. This is a highly complex area and beyond the scope of this question and probably any outgoings! To teach them how to do the job, health and safety etc is, of course, allowable.

It is assumed in this answer that all statutory regulations regarding the employment of minors (eg working hours) has been complied with.
Customer: replied 1 year ago.

Hi Keith, Thanks for your reply. I should probably be a bit more specific- I have a sole trader client who has asked if she can pay her fifteen year old son for doing admin work in her part time self-employed consultancy business she has taxable profits before son's wages of circa £24k. Son's pay will be below NI levels & she has no other employees, so I'm thinking she does not need to register as an employer, however what proof of payment to son does she need- would a signed receipt be sufficient? Is there a recognised allowable amount? Thanks, CAS

Expert:  bigduckontax replied 1 year ago.
HMRC guidelines are:

When you need to register:


As soon as you first employ someone, you will need to register as an employer with HMRC if any of the following is true:

You're paying them at or above the PAYE threshold

You're paying them at or above the National Insurance Lower Earnings Limit

The employee already has another job

They are receiving a state, company or occupational pension

You're providing them with employee benefits

You might need to register as an employer even if you're the only person working in your business (perhaps because you're the only director of your limited company). If any of the conditions above apply to you as an employee, you'll need to register - you'll be both the employer and employee.

You are correct, she will not have to register. let's hope he doesn't do a paper round!

For accounting purposes get the son to sign for his pay on a petty cash receipt on each payment. That supports her accounts and, if the son gets a carbon copy, he has a record also. You were correct in your surmise.
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 1052
Experience: FCCA FCMA CGMA ACIS
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