Hiring your children to your business: everything you need to know

For many of us, the reason we run our business – the “why” – comes from our children. Whether that’s additional income to give them the best opportunities in life, creating a job with more flexible hours, or building something that you can pass down to them someday.

What if you could do something that could directly benefit both your business and your kids at the same time? Employing your children in your business could be the answer.

Note, information here is correct at the time of writing April 2023 and applies to the UK.

Key sections
Benefits
Legal considerations
Hiring children under 15
Hiring children aged 15 to compulsory school age
Hiring children aged 16-17 years old
Hiring children aged 18+
How much can you pay?
Conclusion

Benefits

Employing your children within your company can offer numerous advantages. Not only does it provide them with valuable workplace experience and a source of income during holidays, but it also keeps them engaged and productive.

Additionally, their salaries can be treated as legitimate business expenses, potentially reducing your corporation tax bill at the end of the year. Moreover, it can help your children develop an understanding of your business, which may prove beneficial if they decide to join the company in the future.

However, there are several important considerations to keep in mind to ensure you adhere to child employment regulations.

Before hiring your children, it’s essential to understand the legal aspects involved. You must comply with the UK employment laws, such as ensuring they receive the national minimum wage where applicable, providing a written statement of employment terms, and adhering to the working time regulations.

Additionally, you must make the necessary tax and National Insurance contributions and consider the health and safety regulations applicable to young workers. Like any regular employee, children have to actually perform a role in the business and their pay should be realistic, reflecting the work that they do.

Broadly speaking:

  • Children under 14 can be employed by exception only
  • Children 14-16 are of compulsory school age with employment tightly restricted
  • Children aged 16-17 above school leaving age can be employed full time with certain restrictions
  • 18+ are adults and adult employment rights and rules apply

Hiring children under 15

It is generally illegal to employ children under 13. This will rule out most businesses from employing very young children, although there will be some limited exceptions for specific performance work (for example acting, modelling, sporting events). Any exceptions require a performance license from the local council. You’ll also need to carry out a risk assessment on the child’s employment.

In terms of legal employment, the position for 13-year olds depends on local by-laws. Some local authorities allow 13-year olds to do limited work, some allow them to do the same work as a 14-year-old, and some do not allow them to work at all.

As a rule of thumb, you will need to apply for a work permit to employ any child under 16 and in general, children need to be at least 13 to get a work permit. Other general rules for 13 – 16 year olds are that:

  • They cannot work during school hours;
  • They cannot work before 7am and after 7pm;
  • They must have a break from work of at least 2 weeks a year; and
  • They must have a rest break of 1 hour for every 4 hours worked.

During school term-time 13/14 year-olds can only work a maximum of 12 hours a week. This includes:

  • A maximum of 2 hours on school days and Sundays
  • A maximum of 5 hours on Saturdays for 13 to 14-year-olds

During school holidays 13/14 year-olds are only allowed to work a maximum of 25 hours a week. This includes:

  • A maximum of 5 hours on weekdays and Saturdays
  • A maximum of 2 hours on Sunday

There is no minimum wage for 13/14 year olds so you will need to consider whatever you think their time is worth in line with their role. Children under 16 do not pay National Insurance, so you only need to include them on your payroll if their total income exceeds their Personal Allowance.

Hiring children aged 15 to compulsory school age

A child’s school leaving age depends on whether you live in England, Scotland, Wales or Northern Ireland. Until they reach the minimum school leaving age, the prior rules apply regarding not working during school hours, and not working before 7am and after 7pm. Additionally, they are only permitted to work part-time.

During school term time, children aged 15 to minimum school leaving age can only work a maximum of 12 hours a week. This includes:

  • A maximum of 2 hours on school days and Sundays
  • A maximum of 8 hours on Saturdays

During school holidays children aged 15 to minimum school leaving age are only allowed to work a maximum of 35 hours a week. This includes:

  • A maximum of 8 hours on weekdays and Saturdays
  • A maximum of 2 hours on Sunday

While there is no national minimum wage for 15 year olds, once a child reaches 16 they are entitled to National Minimum Wage (at least £5.28/hr), must be added to payroll, and if they earn more than £123 a week, you’ll also need to do other regular PAYE tasks like making deductions.

Hiring children aged 16 – 17 years old (i.e. above school leaving age but under 18)

Young people aged 16-17 years old can start full-time employment as soon as they leave school, although some additional health and safety regulations apply and employers must adhere to specific working time regulations.

They cannot work more than 8 hours a day or 40 hours a week and are entitled to a 30-minute rest break if they work more than 4.5 hours a day. Additionally, they must receive at least 2 days off each week and are entitled to a minimum of 4 weeks of paid annual leave. They are entitled to National Minimum Wage of at least £5.28/hr.

Note also that in England there is now a requirement for young people to continue to participate in education and training up until the age of 18. If a young person starts a full time job at age 16 they will still need to complete at least 280 guided learning hours a year in education or training.

Hiring children aged 18+

Once your child turns 18, they are considered an adult worker and are no longer subject to the working time regulations for young workers. However, you must still comply with other employment laws, such as paying the National Minimum Wage, providing a safe working environment, and offering statutory holiday entitlements.

How much can you pay?

Your children, regardless of age, have a tax-free Personal Allowance of £12,570. Due to the working hours restrictions combined with pay needing to be in line with their skills/experience, it is unlikely you will pay a child below school leaving age more than their Personal Allowance.

For example, assuming you paid your 15 year old daughter £5/hour for 30 hours a week, for 10 weeks during the school holidays, that works out at a total of £1,500.

However, once your child reaches 16 or has left school, there’s a bigger chance their earnings could exceed the £242/week threshold requiring them to make employee National Insurance contributions.

As an employer you are not required to make Employer’s National Insurance contributions for employees under 21 unless their earnings exceed £967/week.

Conclusion

Employing your children in your family business can provide numerous benefits and opportunities for personal and professional growth. Your kids could add value to your business in a range of ways, from simple admin to running social media accounts.

However, it’s crucial to understand the legal considerations and age-specific requirements involved. Using the guidelines outlined in this article as a starting point, always speak to an employment law or payroll expert if you do decide to hire your children in your business.  That way you can ensure a smooth, successful, and compliant experience for both your children and your business.

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