Help from family members in farming businesses is a common occurrence. There are various areas to consider when deciding who to employ, and what rate of pay should be made.
Family members aged 13 and above can be paid for work they do on the farm. To ensure you do not fall foul of any employment and tax legislation, payments should be:
- At the market rate for the work undertaken; and
- Meet the national minimum wage (NMW).
For example, you cannot pay a family member £50 per hour for fruit picking where other employees are being paid £15 per hour.
What are the tax benefits?
The business can receive a tax deduction for the wages paid. Where the family employee has little or no other income, this can create an overall tax saving.
For example, if a partnership where the business owners are 40% taxpayers pays a wage of £12,570 (2024/25 tax year) to a family member with no other income, there is an overall a tax saving of up to £4,700.
Things to be aware of
- A PAYE scheme may be required.
- Depending on the level of pay, employee’s and
employer’s national insurance may be due. - Pension scheme auto–enrolment may be necessary.
- There is no NMW for employees under the age of 16.
In summary
Help from family members in farming businesses can be both helpful in ensuring the farm runs smoothly, and beneficial from a tax perspective. It is essential to understand the tax position of all family members, and to make sure you remain compliant with PAYE, NMW, and pension regulations.
For further advice please contact our specialist Farms and Estates team below.
