Can I Hire My Child Within My Limited Company?
Yes, you can hire your children in your limited company - but not by chucking them on payroll and calling them “Head of TikTok and Snack Management”.
If they do real work, are paid a sensible amount, and you follow the child employment rules, it can be a useful way to teach them about business while keeping your tax position tidy.
Can I Legally Employ My Child?
In most cases, children need to be at least 13 before they can work part-time. Under 13 is normally a no-go, unless it is something specific like paid performance, acting, sport or modelling with the right licence.
If they are 13 and still of compulsory school age, they can usually only do light work. That means safe, age-appropriate tasks that do not interfere with school, health or general teenage grumbling.
Once they are over school-leaving age, the rules ease up, but normal employment rules still apply. You should still think carefully about hours, pay, contracts, tax and whether the role is genuinely needed.
Do I Need A Child Work Permit?
If your child is still of compulsory school age, you may need a child work permit from the relevant local authority. Do not assume the “family business” bit lets you skip the paperwork.
The permit usually confirms who the child is working for, what they will be doing, when they will work and whether the job is safe. You may also need parental consent and a risk assessment.
Top tip: if your business is based in Kent, you can apply through Kent County Council’s child employment permit process here: https://www.kent.gov.uk/education-and-children/activities-outside-school/child-employment
If the work is in Medway, check Medway Council’s child employment permit process instead: https://www.medway.gov.uk/info/200179/licensing/666/employing_a_child
What Can They Actually Do?
They need to do a real job that genuinely helps the business. HMRC will not be thrilled if the job description is “occasionally sits near a laptop and eats crisps”.
Suitable work could include:
- Scanning receipts or filing paperwork
- Basic admin and tidying digital folders
- Helping with social media scheduling
- Updating simple records
- Office admin, photo sorting or simple marketing support for construction businesses
For construction businesses, be extra careful: building sites, heavy lifting, machinery, power tools and anything risky should be firmly off the menu.
How Much Should I Pay Them?
Pay needs to be reasonable for the work they actually do. Ask yourself: would you pay someone else’s child the same amount for the same task?
GOV.UK says school-aged children are not entitled to the National Minimum Wage. That means there is no legal hourly minimum for a child who is still under school-leaving age, but the pay still needs to make commercial sense for tax purposes.
Once they are over school-leaving age, National Minimum Wage rules can apply. Check the current rates on GOV.UK before agreeing pay: National Minimum Wage and National Living Wage rates. Rates change, and nobody wants a payroll surprise with a side order of HMRC paperwork.
How Much Do They Get Taxed?
They are taxed like any normal person. If their total income is within their Personal Allowance, they may not pay Income Tax; if they earn above it, PAYE tax can apply in the usual way.
Children under 16 do not pay National Insurance. Once they are 16 or over, National Insurance can apply if they earn above the relevant thresholds, so it is worth checking before payday becomes “oops-day”.
Do I Need To Put Them On Payroll?
For children under 16, you only need to include them on payroll if their total income is over their Personal Allowance. That said, you still need proper records showing what they did, when they worked and what they were paid.
If you want the wage treated as a business expense for Corporation Tax, it needs to be wholly and exclusively for the business. In plain English: real work, fair pay, decent records.
For older children, payroll is more likely to be needed, especially if they earn above PAYE or National Insurance thresholds. Blue Rocket can help you get this set up properly, without turning your family dinner into a tax tribunal.
Can They Be A Shareholder?
Possibly, but tread carefully. Children can generally hold shares, subject to your company’s articles, but dividends paid to minor children can be caught by HMRC’s settlements rules and taxed on the parent instead.
In other words, wages for genuine work are usually much cleaner than handing out shares just to shift income. Get advice before making your child a shareholder, especially if the plan is “tiny shareholder, massive tax saving”.
Do I Need To Offer A Pension?
Most teenage employees will not need to be automatically enrolled into a workplace pension. Auto-enrolment usually applies where the worker is aged at least 22, earns over £10,000 a year and works in the UK.
If they are aged 16 to 21 and earn over £10,000 a year, they are not automatically enrolled, but they can ask to opt in, and if they do, you must enrol them and make employer contributions. If they earn £6,240 or less, they can ask to join a scheme, but you do not usually have to contribute. See The Pensions Regulator’s guidance here: opting in and joining.
What HR And Legal Bits Should I Think About?
Even if they are your child, you still need to act like an employer. That means safe working conditions, sensible hours, clear duties and proper records.
Since 6 April 2020, employees and workers are entitled to a written statement of employment particulars from day one. That is not always the same as a full employment contract, but it must cover key terms such as pay, hours, holiday and job title.
A simple job description is a good place to start. Keep timesheets, note what tasks they completed and make sure the work does not affect school attendance, education or wellbeing.
You should also check your employer’s liability insurance, risk assessments, holiday rules, sick pay position and whether your employee handbook needs updating. Family business does not mean “wing it and hope for the best”.
Need help ticking the HR boxes? Blue Rocket works closely with our sister company, The HR Dept South East London & North Kent. Danny Shaw can help with contracts, policies, handbooks and the practical people stuff, without making it feel like a 300-page rulebook has landed on your desk.
Could They Be Freelance Instead?
Possibly, but only if it is genuine. If your child is older and genuinely runs their own small service, such as design, IT support, photography or social media help , self-employment might fit.
The key word is genuine. If you control the hours, tasks, tools and pay, they may look more like an employee, and HMRC will not be distracted by a homemade invoice template.
Bringing a child into a partnership is also possible in some cases, but that needs proper advice. It has legal, tax and practical consequences, so it is not one to casually announce over Sunday lunch.
How Can Blue Rocket Accounting Help?
Hiring your child can be a brilliant move for them, for the business and for your tax planning, but only when it is done properly.
Blue Rocket can help you decide whether the role is sensible, how much to pay, whether payroll is needed and what records to keep. We can also help keep your HMRC reporting clean and compliant.
The golden rule is simple: real work, fair pay, proper paperwork.
Not rocket science, just great accounting.
Call Blue Rocket Accounting to discuss payroll and tax planning for employing family members.
Relevant Blogs we might think you'll find useful
- What’s the Difference Between an Employee and a Subcontractor? | Blue Rocket
- 5 Key Things to Consider When Operating A Business Payroll | Blue Rocket
- How Your Employees Can Benefit from Your Payroll Structure | Blue Rocket
