There's no ban on employing a retired family member, but he goes on the payroll just like anyone else — HMRC doesn't give a "family" shortcut.
Set up PAYE properly
Register as an employer with HMRC if you haven't already, and run him through payroll with Real Time Information (RTI) submissions each time you pay him. He'll need a proper payslip, and you'll report the pay to HMRC on or before payday as usual. Also do the standard right-to-work check and give him written employment terms — family or not, he counts as an employee.
Tax and National Insurance at £150 a week
£150 a week is £7,800 a year. The Personal Allowance for 2026/27 is £12,570, but that allowance covers all his income combined — including his pension. So if his pension already uses up most or all of his allowance, some or all of the £7,800 could be taxable at 20%. HMRC will issue him a tax code that allocates his allowance across his income sources, and your payroll software handles the rest — you don't need to work this out yourself.
For National Insurance, being over State Pension age is a genuine advantage: he pays no employee NICs at all (use NIC category C in payroll). Employer NICs can still apply to you as the employer, though, so budget for that.
Auto-enrolment and the pay rate
For 2026/27 the automatic enrolment earnings trigger is £10,000 a year, so at £7,800 he won't be automatically enrolled into a pension. But because his earnings are above the £6,240 lower earnings limit, he's what the rules call a "non-eligible jobholder" — if he asks to join your scheme, you must enrol him and contribute. Finally, the pay itself must be a genuine commercial rate for the admin work and at least National Minimum Wage; HMRC can challenge salaries to family members that look like disguised gifts, which would lose you the deduction.
Bottom line
- Run him through normal PAYE with NIC category C.
- Budget for employer NICs and check his tax code once issued.
- Keep his hours and duties documented — that's what makes the salary an allowable business expense.
