Involving your children in your business

Have you ever wondered about succession planning or involving your children in your business? We often get asked what options are available when it comes to adding children as shareholders, employees or both. In this blog we’ll cover the various scenarios.

Why involve your children in the business?

Having worked hard to build up and establish our businesses, many of us view the business like another child. We invest blood, sweat and tears to make our businesses a success. The idea of then selling or leaving our legacy to someone else can be a very difficult decision. What’s more, our children have grown up around the business, so it forms a big part of their lives too.

Involving our children in the business therefore becomes a natural consideration. It may be that we’re looking at the long term and succession planning, or perhaps we’re simply looking to involve them a little more in the day to day operations.

There are two routes we can look to utilise – allowing them to gain a level of ownership by becoming shareholders, or simply taking them on as employees. These options aren’t exclusive of each other, and so we can allow them to be both shareholders and employees too.

Children as shareholders

In relation to becoming shareholders there are a number of factors to be aware of. Firstly, there are no statutory restrictions in terms of under 18’s holding shares. However, you will need to check the company’s articles to ensure it is permitted.

A benefit of providing them with shares is that it’s a great way for them to gain a capital asset and would be useful for both inheritance tax and capital gains tax planning.

As shareholders, your children would also benefit from dividends and capital payments. The one downside is that in terms of dividends, anything over £100 per annum will be taxed in the hands of the parents for income tax purposes. This would also likely be true if a trust is created.

Children as employees

Whilst company articles permitting there are no age restrictions on children becoming shareholders, the same is not true when it comes to being an employee.

As a general rule, children under 14 are not allowed to be employed. For children over 14 there are various restrictions around hours of work, type of work, levels of pay and the requirement to obtain the local authorities permission – however they can be employed!

In terms of taxation, it will be linked to the amount they earn, personal allowances, etc.


As you can see, there are pros and cons of both approaches. When considering the different routes much will depend on the age of your children, whether you’re looking at potential succession planning, the tax position and how you are looking to involve them in the company.

If you would like more information or to understand how the scenarios apply to your specific situation, please get in touch. We’d love to hear from you.