Employing family members and voluntary staff

Tax reporting requirements - young, old or voluntary staff

Make sure that dividends paid to family members who own shares are clearly distinguished from their salary or wages. Dividends are not usually dealt with through PAYE and do not require National Insurance contributions (NICs).

You may ask for a dispensation from HM Revenue & Customs not to report expenses or benefits that are not taxable - this would include expenses paid to voluntary workers for carrying out work for your business. The dispensation also means that the expenses or benefits do not count as earnings for NIC purposes. View a guide on expenses, payments and benefits in kind on the HM Revenue & Customs website.

Regardless of the age of your paid employees, you must comply with HM Revenue & Customs reporting requirements.

You must keep records on pay and deductions and, for National Minimum Wage purposes, details of working hours and other appropriate information.

Subjects covered in this guide

• Introduction
• Family employees - consider your motives
• Family employees - minimising business risks
• Preventing communication breakdowns
• Employing your spouse
• Employing younger family members or volunteers
• Voluntary staff - points to consider
• Voluntary staff - contract rights, benefits and allowances
• Health and safety issues
• Tax reporting requirements - young, old or voluntary staff
• Here's how our business overcame the pitfalls of employing family members

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