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September Questions and Answers
Newsletter issue – September 2025
Q: My teenage child has a summer job this year. As they are under 18, do they need to worry about tax on what they earn?
A: Contrary to popular belief, children are eligible to pay tax just like adults. They rarely do because if they do earn anything, it is usually under the annual Personal Allowance of £12,570.
Some important things to note, though, are that under-18s should be paid a minimum of £7.55/hour and will need to pay National Insurance if earning over £242/week and aged 16+. Children (from age 14) can only work part-time until they are 18 (in England - it is 16 in Scotland, Wales and Northern Ireland). There are some exceptions, for example under-14s can work if they are performers or models.
Q: I have been cohabiting with my long-term partner for decades, but I've heard that could put us at a disadvantage when it comes to Inheritance Tax compared to couples who are married. Is this true?
A: Unfortunately, that is true. Married couples and civil partners get what is known as 'Spousal Relief'. This exemption means that when one partner dies, their entire estate can be left to the surviving partner without incurring any inheritance tax (IHT). Their personal nil-rate band (of £325k) also gets transferred, meaning when the surviving partner passes away, they can pass on £650k's worth of assets free of IHT.
If a primary residence is involved, the £175k residence nil-rate band also gets transferred, meaning the surviving partner will have an allowance of £350k if they pass the property onto direct descendants on their death.
Cohabiting partners are unable to benefit from this pooling of allowances, so there will likely be a larger IHT bill to pay when passing on assets upon their death.
Q: I've heard about landlords using "Form 17" to reduce their tax bill on rental income. What is it and how do you qualify?
A: Form 17 can be used by married couples (or civil partners) when they jointly own a property at different percentages, rather than a 50/50 split. This is beneficial if the owner with the larger share is a basic-rate taxpayer and the other is a higher-rate taxpayer, as the larger proportion of the rental income will be taxed at the lower rate than would have been taxed with a 50/50 split of the income.
It should be noted that this cannot be used for commercial letting of furnished holiday accommodation. You and your partner must hold the property as "tenants in common" and not "joint tenants".
