Recently, our client, Ms Wang, stumbled upon us and asked us what to look out for when hiring family members.
Maybe you’ve thought about the same thing, since hiring a family member might be a good idea after all.
Family ties may increase trust and understanding, but often overlook employment law and tax issues.
In this article, we will discuss the details that need to be paid attention to when hiring family members from the perspective of tax rules.
Hiring Your Spouse
When hiring your spouse, please pay attention to one principle: treat them equally
Nondiscrimination here means treating your spouse to the same tax laws as any other employee. You will also need to pay your spouse and report to HMRC.
A few things to note here:
- Avoid special treatment in compensation, promotion and working conditions
- Make sure you still pay the taxes and National Insurance (NI)
- Adhere to the working hours rules for young family members
- Have employer liability insurance that covers all young family members
- Check if you need to provide them with a workplace pension scheme (Pension)
In addition, there are also clear rules for remuneration:
- If employed family members live with you, they will not be covered by the National Minimum Wage.
- If employed family members do not live with you, they will be covered by the national minimum wage.
You may also like to read this article: How Sole Traders Choose Pension Savings
Hiring Your Children
First, it is possible under employment law to hire a child to work for your business.
Second, you also need to pay them wages. The amount paid depends on whether they live with you. If they do not live with you, they will need to pay the national minimum wage.
It is important to note here that you must be registered with HMRC as an employer if you are paying your child. Even if it is only a short-term or holiday job, the principle of payment is also subject.
My child is a student, are there special rules?
When your children work at any time other than normal holidays, they need to be paid as usual using PAYE.
For specific circumstances, we strongly recommend that you read government documents that are updated in real time to avoid penalties.
Finally, keep in mind the principle of “equal treatment”, there is no excuse for any employment relationship to change the payment process. So don’t take any chances.
If you have any tax issues, please get in touch with us and get support from our professional accounting team.
