Family Employees

[RoastedSlopes]

If I wanted to pay my son say £50 a week for design services (he is a trainee designer) would this be acceptable to HMRC? Obviously I would need to show his input if Hector wanted to see it?

[PerfectStorm]

Is he of working age?

[northernladuk]

Couple of questions spring to my mind as this looks a bit weak just from what you've put. Why only £50? Looks more pocket money that a wage to me. Is he in full time education, how old, what level of education?

In theory as long as he is old enough I don't think this would be a problem but wouldn't you rather support your son out of your own pocket rather than raising any interest at HMRC? We are not talking mega bucks here.

[RoastedSlopes]

Is he of working age?

He is yes, 18.

[RoastedSlopes]

Couple of questions spring to my mind as this looks a bit weak just from what you've put. Why only £50? Looks more pocket money that a wage to me. Is he in full time education, how old, what level of education?

In theory as long as he is old enough I don't think this would be a problem but wouldn't you rather support your son out of your own pocket rather than raising any interest at HMRC? We are not talking mega bucks here.

Its a bit of both, he is at university, but want to give him some real life work to do as well which will improve his skills. We do support him whilst at University, but also think if he is doing some work for me, then why not add him to the payroll?

Of course, if it raises flags with HMRC because of his status, then I may have to rethink how this will work.

Thanks for the response.

[ASB]

If he is actually doing genuine work you can demonstrate, and it is at a fairly normal commercial rate then it should be absolutely fine.

Thousands of people engage their family into their business in various ways.

But, put yourself in the taxmans shoes. His initial reaction is going to think it is just a diversion of income to reduce the level of support etc so a degree of caution is sensible - covered by being able to show genuine output from him and use of it in my view.

A sideline is what impact - if any - it may have on his student finances.

[TheFaQQer]

As long as you are getting some degree of value for money, I'd have no qualms about doing it.

I'd consider doing it almost as a project based payment rather than a regular weekly thing. Give him the requirements, and get him to do the effort estimate, and come up with a quote / proposal for the company to consider - that will also get him used to working out what he can charge and how long things take to do in the real world.

[TheCyclingProgrammer]

If I wanted to pay my son say £50 a week for design services (he is a trainee designer) would this be acceptable to HMRC? Obviously I would need to show his input if Hector wanted to see it?

Do you want to employ your son or pay him on a freelance basis?

Either way - whether you pay him for services or employ him, from YourCo's point of view, it needs to be wholly and exclusively for business purposes to be an allowable deduction for Corporation Tax purposes.

So he does need to be doing what you say he will, he needs to give you an invoice (if freelance) and if HMRC ever challenged it you would be expected to have some evidence to back up your claims.

If you employ him then you should be clear what that entails. If you already operate payroll for yourself you will need to add him to the payroll.

If you go down the freelance route, it would be less hassle for you, however whilst your son would probably not be earning enough to pay any tax, if its a regular thing he will probably need to register as self-employed. If its just a few one off jobs then no need to register as self employed as it can just be treated as additional income (and he would have no need to notify HMRC if he stays below the personal tax allowance threshold).

[northernladuk]

Could you not look in to just doing this during holiday time. It would look a lot less suss to the taxman.. 18 year old students doing any work on top of getting pissed and attempting to roll in to lectures... bit hard to swallow that one

Just get him to bill you more and do the work when he is home? He should be able to do enough to justify the full yearly amount of £50 a week just in the time between years? That looks a lot more viable to the tax man. It also doesn't impact on his study time and any job he might get whilst away to prop himself up. There is only a short period of time between hangovers to get everything else in.

As has been said though... if you really can demonstrate the work mid term then fair enough. That's your call.

There is of course the option of calling your accountant. He may do exactly the same for other people and have some good advice on it.

[tractor]

...

If he is actually doing genuine work you can demonstrate, and it is at a fairly normal commercial rate then it should be absolutely fine.

Thousands of people engage their family into their business in various ways.

But, put yourself in the taxmans shoes. His initial reaction is going to think it is just a diversion of income to reduce the level of support etc so a degree of caution is sensible - covered by being able to show genuine output from him and use of it in my view.

A sideline is what impact - if any - it may have on his student finances.

Zero hours at NMW then