One of the beauties of living in the UK is that children have a tax-free allowance worth £12,570 a year – the same as everyone else.
The so called Personal Allowance for tax-free income is £12,570 for the 2021/22 tax year and applies to all children from the day they are born!
And because children are usually not earning, they will not be using up their tax free allowance already.
However, it is easy to breach employment law or local bylaws in employing children under the age of sixteen and hard to justify much in the way of remuneration. Also in our view it is unwise to have a child as a shareholder in your company. In any case you as parents may be taxed on any income they receive.
So what is the answer?
At Oldfield Advisory we have developed a solution called the “Family Wellbeing Trust”. We developed this specifically for:
- Providing a tax efficient income for a child
- Paying for school fees tax efficiently
- Passing wealth from one generation to another without losing control
- Supporting children's wellbeing and needs as they go through life tax efficiently
Trusts and taxation are very specialist areas. Oldfield Advisory are leaders in this field and will help you to avoid the pitfalls. The Family Wellbeing Trust is a unique creation and designed to be very low maintenance and easy to use from the beginning.
If you would like further advice, or an explanation of how you can pay school fees tax efficiently and provide a child with a tax free income, then please contact our team for further assistance.
Please note: This report is provided for information only. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this report can be accepted.