Employing family members
Family employees and tax requirements
Make sure that dividends paid to family members who own shares are clearly distinguished from their pay. Dividends are not usually dealt with through the PAYE (Pay As You Earn) system and are not subject to National Insurance contributions (NICs).
Exemption
You may ask for an exemption from HM Revenue & Customs (HMRC) regarding reporting expenses or benefits that are not taxable.
The exemption also means that the expenses or benefits do not count as earnings for NIC purposes. See further guidance on exemptions and dispensations.
Regardless of whether or not they are family members, you must operate a PAYE system for all your paid workers - see PAYE and payroll for employers.
You must also keep records on pay and deductions and, for National Minimum Wage and Working Time Regulations purposes, details of working hours and other appropriate information - see National Minimum Wage and National Living Wage records and reporting.
