Discover the ins and outs of child employment in your business. From legal to tax implications, ensure you're well-informed.
Can children legally work for your business?
Children should be at least 13 years old to be legally employed (or 14 years old for strenuous work). For this guide, we are considering children between 13 - 16 years old (or up to school-leaving age).
There are restrictions on the number of hours all children can work in/outside school term times: https://www.gov.uk/child-employment/restrictions-on-child-employment
Only a child of 16/school leaver age is entitled to the National Minimum Wage rate for "Under 18's", see: https://www.gov.uk/national-minimum-wage-rates
Tax and payroll considerations
If your business does not already operate a formal PAYE payroll scheme and you're paying the child under the weekly National Insurance Lower Earnings Limit (LEL), then you do not need to set up and operate a formal payroll.
The cost of children's wages is a tax-deductible expense of your business as long as they're paid at the market rate for the type of work they perform. See BIM37737.
All children will pay Income Tax on earnings over the Personal Allowance and, once they reach 16 years old, National Insurance.
Must a child complete a Tax Return?
A child, under 16 years old, paid via the payroll or earning under the Personal Allowance does not need to complete a Tax Return. A child of any age, earning over the Personal Allowance will be required to register for and complete Self-Assessment Tax Returns.
In summary: Can you employ children in your business?
Yes, you can, as long as the work isn't too strenuous, their hours are restricted during school term times, and they're paid at the market rate for the work they perform; and if necessary, via the company payroll. In turn, your business will receive tax relief on their wages.
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