The school holidays are around the corner and your children might have some time on their hands, so here’s a tax-efficient way to help fund their first car and potentially university costs.
When your children reach their teens you could put them on the payroll and get them working for the business periodically. You need to be sensible about the amount you pay them because there are strict rules around the hours and times that your children are allowed to work.
Start early, and there’ll easily be enough there to fund their driving lessons and a car.
The beauty of this is:
- your business gets tax relief on the wages paid
- your child doesn’t pay any tax unless their wages exceed the annual personal allowance
- you haven’t had to pay tax on the income you’d have to earn to fund the car for them.
So yes, HMRC is actually helping you for once!