Employing a carer or personal assistant (PA), brings with it many responsibilities such as tax, National Insurance, paying wages and employment law.
The Low Incomes Tax Reform Group (LITRG) have a specialist website which provides information and support for anyone who takes on a personal assistant to help them live independently. You can visit the site at www.disabilitytaxguide.org.uk
Tax employment status – e.g. is your PA, employed or self-employed? The most important point to understand is that an individual cannot just ‘decide’ that a PA is self-employed. Making a PA self-employed can be attractive because it removes many responsibilities from the person taking on the PA and can save them some money. However it is the responsibility of anyone taking on a PA to check the status carefully.
The first step in every case is to refer to HM Revenue and Customs’ (HMRC’s) Employment Status Indicator tool. This useful tool takes the form of an online questionnaire, the answers to which produce a result as to whether someone is self-employed or employed.
The completed form can be saved and printed out for future reference, should HMRC ever challenge the decision. The tool is based on tax legislation and many years of tax cases too numerous to mention here. But the Disability Tax Guide website has more detailed guidance on the general rules surrounding employment status.
Taking on an employee and setting up as an employer – if your PA is an ‘employee’, the next step is to register as an employer with HMRC so that a payroll can be set up.This is an easier process than it sounds and LITRG provide step-by-step guidance on the Disability Tax Guide website
An employer must register with HMRC if any of the following are true:
If you are taking on a PA, you must register with HMRC by phone. The HMRC “New employer” number is 0300 200 3211.
Payroll and ‘Real Time Information’ – ‘Real time information’ (RTI) is the system used for sending information about Pay As You Earn (PAYE) tax and National Insurance to HMRC – usually every payday. You may find the Payroll datacard 2017/18 useful to download
There are two ways the information can be sent - online, or, if certain requirements are met, by paper. More detail on when paper filing can be used is available on the Disability Tax Guide website. Broadly, it is available for those who, for whatever reason, may be unable to use a computer or have no internet capability.
For online filing, a payroll program will be required and there are several options on the market including some free ones. LITRG explain all of the options on the Disability Tax Guide website. For employers choosing to use HMRC’s free Basic Payroll Tools (BPT), LITRG have a unique tool on the site that enables you to create a payslip – something that BPT cannot do. This has proven to be one of the most used features.
Pensions auto enrolment (Workplace pensions) - Every employer with at least one member of staff now has (or will soon have) a new responsibility of putting those employees who meet certain criteria into a workplace pension scheme and contributing towards it. This includes those who take on a PA. Direct payment users should speak to their Local Authority regarding their budget to pay for these extra costs.
The process is called automatic enrolment. This is because it is automatic for staff – they don't have to do anything to be enrolled into the pension scheme. But it is not automatic for an employer and there are several things that the employer has to do.
LITRG summarise the main aspects of auto enrolment on the Disability Tax Guide website and link to more detailed guidance on the Pensions Regulator website, which includes their planning tool to help employers work out what to do and when. Special support is given to those employing staff in their home, such as a PA.
National Minimum Wage/National Living Wage - Employers must pay staff the correct minimum wage. The current rates are on the Disability Tax Guide website.
There are also explanations and examples around the complex areas of the minimum wage law, such as travel time and deductions, which can be difficult for workers and employers alike, to understand.
A regular news feature means the most up to date disability related tax matters are highlighted.
The website also has links to organisations who provide further information on other issues that can cause difficulty when taking on a PA, for example to do with employment law.
If you have any comments about the Disability Tax Guide, and have any suggestions about additional material LITRG could feature, please get in touch with them by emailing firstname.lastname@example.org
If all of the above seems to much to take on, many people using the Direct Payments system decide not to operate PAYE themselves and there are payroll agencies that will do it on your behalf. You send them details of your employee's gross wages (before tax) and they operate PAYE and prepare payslips for you. The responsibility for PAYE remains yours where you engage a payroll agent to act on your behalf. Your social worker should be able to provide you with details of services operating in your local area.