Can a sole trader pay their children for helping in the business?

Yes, if the work is real, the pay fits the work and the money is actually paid. In 2026-27, paying a child aged 16 or over £96 a week or more means payroll; younger children have strict hour limits.

Paying your son or daughter for doing your invoices, answering the phone or tidying the van stock can be a business expense, the same as paying anyone else. Two sets of rules apply: tax rules on what you can deduct, and child employment law on what a child may do. This page follows HMRC's Business Income Manual (BIM) and GOV.UK as checked on 17 October 2026.

What HMRC looks at

The reason for the pay. HMRC's manual (BIM37735) says the payment must be wholly and exclusively for the business. If there is another reason, either as well as or instead of the business, the deduction is not allowable.

The amount. Being your child does not stop the wage counting. BIM47105 says that where there is equal pay for equal value, the amount is fully allowable. It is not deductible if the amount is decided by the relationship. Paying a relative significantly more than you would pay someone else for the same work is a sign of a non-business purpose, and only the excess may be disallowed.

Pocket money is not a wage. In Dollar v Lyon (BIM37737), farmers paid their four children, aged 14, 11, 9 and 7, £2 a week each for helping on the farm. The payments were found to be pocket money and disallowed, except the cash paid to the eldest. The question is one of fact, so records matter.

What the law lets your child do

In England a child can leave school on the last Friday in June if they will be 16 by the end of the summer holidays. Until 18 they must stay in education or training, which can be part-time study alongside 20 hours or more a week of work.

Below school leaving age, GOV.UK sets these limits: no work during school hours, before 7am or after 7pm; no more than 12 hours a week in term time; and in the holidays up to 25 hours a week at 14, or 35 hours at 15 and 16. GOV.UK says most councils require businesses employing school-age children to get a child employment permit, and GOV.UK warns an employer may not be insured if a child works without one.

Payroll works differently by age. GOV.UK says children under 16 do not pay National Insurance, so they only go on your payroll if their total income is over their Personal Allowance, normally £12,570. From 16, the usual PAYE triggers apply, starting at £96 a week.

What this means for you

Take a self-employed electrician whose 17-year-old does the quoting, invoicing and certificate filing for 8 hours a week. They pay £11.50 an hour, a fair rate for office work and above the £8 minimum, so £92 a week or £4,784 a year, by bank transfer every Friday.

That is below £96 a week, so payroll is not needed unless another trigger applies. A 17-year-old who has had a Saturday job elsewhere this tax year counts as having had another job, and then you must register. The wage is below the £12,570 Personal Allowance and below the £242 weekly point where employee National Insurance starts, so with no other income your child pays neither. Employers pay no National Insurance on under-21s up to £967 a week in 2026-27.

If the electrician's profit stays between £12,570 and £50,270 with and without the wage, outside Scotland, deducting £4,784 saves 20% Income Tax and 6% Class 4 National Insurance: £1,243.84 a year. This is an example only.

The Construction Industry Scheme (CIS) is for paying subcontractors, not employees: on each CIS monthly return the contractor must declare that the subcontractors listed are not employees. GOV.UK also tells CIS contractors to check whether a worker should be employed instead, and an employee is paid through payroll.

Employers' liability insurance is not needed if you only employ a family member; GOV.UK's list includes a son or daughter. Once you employ anyone outside that list, it is, with cover of at least £5 million from an authorised insurer.

Steps to pay your child properly

1. Check their age against the table, and for a school-age child ask your council's education department about a permit and local rules.
2. Write down the duties and the hours, keeping a school-age child to the legal limits and away from site work.
3. Set an hourly rate you would pay anyone else for that work, at or above the minimum wage once they reach school leaving age.
4. Register as an employer before the first payday if a child aged 16 or over is paid £96 or more a week or another trigger applies, or an under-16's total income goes over their Personal Allowance.
5. Pay by bank transfer from the business account into their own account, not cash in hand.
6. Keep timesheets and payslips, and record the wages as a staff cost in your bookkeeping or Making Tax Digital (MTD) software.

Our guide to paying your partner a wage covers the same tax tests for a spouse. The free MTD check shows when MTD starts for you, and the trades section has more guides.