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Where Taxpayers and Advisers Meet

Partnership with minor children

silly-putty-3000
Posts:5
Joined:Tue Aug 16, 2022 10:15 am
Partnership with minor children

Postby silly-putty-3000 » Tue Aug 16, 2022 10:24 am

Hi,

I'm currently in a partnership with my wife as a software developer.

I'm also training my children (12 and 14) in this field so they have a job opportunity (With me) when they leave school.

According to: https://www.gov.uk/hmrc-internal-manuals/partnership-manual/pm132400#:~:text=In%20law%2C%20a%20person%20under,the%20individual%20and%20the%20business. it would appear that minor children are able to act as partners in order to benefit from the tax allowances as long as they can demonstrate an understanding of the business.

Given both of my children understand the nature of my business and can contribute, I would read this as they are legally allowed to become partners. Have I understood this correctly?

As with everyone these days, I'm just trying to save some money where I can but don't want to break any rules to do so.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Partnership with minor children

Postby darthblingbling » Tue Aug 16, 2022 9:39 pm

Wouldn't ever be black and white and easily open to challenge by HMRC, especially as you seem to want to do it purely for tax purposes.

Would you not consider employing them and paying them a wage that's commensurate to whatever role they do? I'd assume that would likely be below the tax and NI thresholds and probably less open to challenge.

silly-putty-3000
Posts:5
Joined:Tue Aug 16, 2022 10:15 am

Re: Partnership with minor children

Postby silly-putty-3000 » Wed Aug 17, 2022 12:10 pm

Yes, grey areas are a pain ...

From what I understand, the rules on employing minors are more strict than those of a partnership so I didn't consider it.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Partnership with minor children

Postby bd6759 » Wed Aug 17, 2022 6:35 pm

You would be disposing part of your interest in the partnership to your children. Possible CGT implications, but more important would be the settlements legislation.


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