Can sole traders pay family to help with the business?

It’s something a lot of small business owners end up wondering:

“Can I just pay my partner to help with admin?”
“Can my teenager help out at the weekend and earn a bit of money?”

The short answer is yes – you can pay family members through your business, but you must do it properly or it could backfire with HMRC.

It’s allowed, but only if it’s real work

There’s nothing in UK tax law that stops you from employing a family member. In fact, it’s common in small, family-run businesses.

But there are rules:

• They must actually do something for the business.
• The pay has to be reasonable for the job.
• You need to keep records.

If you’re paying them just to reduce your tax bill and they’re not really working, you could run into problems with HMRC.

Real-life example: helping on market day

Martin runs a small coffee trailer at events. His 16-year-old daughter helps out at weekends, setting up cups, serving customers and wiping down surfaces. He pays her £40 for each event and logs it as staff wages.

Because it falls under the tax and NI thresholds, she doesn’t pay any tax, and Martin includes it as a business expense on his Self-Assessment return.

Don’t overpay

HMRC won’t accept a £15,000 salary for someone who occasionally answers your phone. The pay has to make sense. Let’s say your partner helps with social media or emails. Minimum wage (currently £12.21/hour for over-21s in 2025–26) is a good starting point.

See: National Minimum Wage rates – GOV.UK

If you want to claim their pay as a business expense, you need to show:

• What they do
• When they work
• What you pay them and why

Example: overpaid admin help

Debbie paid her son £800 a month to help with emails in her catering business, but he was away at university most of the year.

When she was selected for a random HMRC enquiry, she couldn’t show any work logs or payment records. The expense was disallowed and she had to pay back tax and interest.

How to pay family members – sole trader vs limited company

If you’re a sole trader:

• You can pay them from your business account.
• Keep written records of the hours and amounts.
• You include the wages as an allowable expense in your Self Assessment.

If you run a limited company:

• You’ll usually need to add them to the payroll (PAYE).
• You must submit real-time information to HMRC every time you pay them.
• They’ll need a proper employment contract, even if informal.

See: Running payroll – GOV.UK

Example: informal admin help

Jas runs a bookkeeping service as a limited company. Her husband Mark was made redundant and now helps her manage diary bookings and scan receipts for clients.

She pays him £120 a week through PAYE and he receives payslips. Mark doesn’t have another job, so his income is tax-free using his personal allowance.

Can you employ your children?

Yes, but you have to be careful.

• Children under 13 can’t be employed legally in the UK.
• Between 13 and school-leaving age, you may need a child employment permit from your council.
• There are restrictions on hours and types of work.

You’ll also need to follow the same rules: real work, fair pay, proper records.

Check: Child employment rules – GOV.UK

Example: local permit issue

James runs a cycle repair business in Norfolk. His 14-year-old niece helped clean bikes and greet customers on Saturdays. A local council officer stopped by during an inspection and asked for her employment permit, which James didn’t know he was required to have. They were let off with a warning but had to apply for the permit properly.

Don’t risk it: what HMRC might ask

If HMRC reviews your accounts and sees wages to a family member, they might ask:

• What was their job?
• When did they work?
• How did you decide how much to pay?
• Did they get payslips or money into a personal account?

If you don’t have clear answers, they may disallow the expense and hit you with penalties or extra tax.

Can you pay them in cash?

Technically, yes, but it’s risky.

If you do, make sure you:

• Keep a signed timesheet or payment record.
• Still run payroll if required.
• Avoid paying in cash regularly without documentation.

HMRC is especially sceptical of cash wages within families. It’s one of the most common red flags for undeclared income.

Real-world tip

Some businesses give their spouse or child a bit of help money without recording it and never claim it as an expense. That’s less likely to trigger HMRC questions, but they’re also missing out on a legitimate tax deduction. If you’re going to pay family, it’s worth doing it right and benefiting from it properly.

Example: informal support without claiming

Priya runs an Etsy shop selling embroidered gifts. Her partner, Sanjay, helps with post office runs and packaging during the Christmas rush. She gives him £100 as a thank-you but doesn’t record it or claim it as an expense. It works for them because the support is occasional and informal.

Final word

There’s no problem with hiring family. Many small businesses do. Just ensure the work is genuine, the pay is reasonable, and the paperwork is in order. It’s one of the most straightforward tax-efficient steps you can take if you stay within the lines.