When life becomes more difficult and the activities of daily living become more testing, rather than going into care, many people choose to employ a carer to enable them to remain living in their own home. This decision usually arises after an assessment by Social Services and you may need a carer or personal assistant for just a few hours or maybe full time depending upon your assessed needs but the carer’s job is to assist you to lead as independent a life as possible.
Employing a carer or personal assistant, whether funded through government money, or privately, brings with it many responsibilities such as registering as an employer with HM Revenue and Customs, operating a Pay As You Earn scheme, arranging a workplace pension and paying at least the minimum wage. The Low Incomes Tax Reform Group’s (LITRG’s) website contains guidance on all these topics.
Their general ‘Taking on an employee’ guidance is intended to help those hiring an employee, who do not have an accountant or payroll professional assisting them, understand and manage their employer responsibilities, particularly from a tax perspective. They offer some specific pointers for those considering hiring a carer or personal assistant (sometimes called care and support employers), to supplement their general information in their ‘Independent Living’ section.
The rest of this page briefly explains some of the main considerations when hiring a carer or personal assistant and highlights the guidance available from LITRG in those areas.
Tax employment status – e.g. is your carer or personal assistant employed or self-employed?
The most important point to understand is that a person hiring a carer or personal assistant cannot just ‘decide’ that they are self-employed and so pay them gross. Doing this can be attractive because it removes many responsibilities from the hirer and can save them some money. However, it is the responsibility of anyone hiring someone to check that person’s ‘status’ carefully by considering all the facts.
There is specific guidance on the rules surrounding employment status from a care and support employer’s perspective, in LITRG’s specialist section. In particular, please be aware that some ‘introductory agencies’ assert that the carers or personal assistants they provide are self-employed, but you should be wary of taking this at face value.
Please see the updated guidance around live in care around introductory agencies and ‘self employed’ live in carers: https://www.litrg.org.uk/tax-guides/disabled-people-and-carers/independent-living/using-agency#toc-what-if-i-use-an-introductory-agency-
In this specialist section, LITRG also cover what the rules are if you are elderly or disabled and take on an agency worker, a family member or a carer who works through their own limited company.
Setting up as an employer – if the carer or personal assistant you are hiring is an ‘employee’, the next step is probably to register as an employer with HMRC so that a Pay As You Earn scheme (PAYE) can be set up. The PAYE regime requires tax and National Insurance to be deducted from most payments made by employers to employees.
You must register with HMRC (and thus operate a PAYE scheme) if any of the following are true:
- You are paying them at or above the National Insurance Lower Earnings Limit (£123 per week in 2022/23)
- The employee already has another job
- The employee is receiving a state, company or occupational pension
- The employee is receiving employee benefits
Registering with HMRC as an employer, can be an easier process than it sounds and LITRG provide step-by-step instructions in their general guidance.
Running a payroll – LITRG’s website also looks at what running a payroll involves – basically it is the process by which an employee’s wages are paid and appropriate deductions (like PAYE tax) made. This sounds complex, but payroll software (see below) means that the required calculations can usually be done at the touch of a button.
In recognition that not all employers will want to run their own payroll, there is also guidance on finding a payroll provider to help with payroll tasks.
Reporting information to HMRC - ‘Real time information’ (RTI) is the system used for sending payroll information to HMRC – usually every payday.
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 in the specialist care and support employer section of LITRG’s 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, payroll information is submitted digitally to HMRC via payroll software. There are several options on the market including some free ones like HMRC’s Basic PAYE Tools (BPT), which is simple, secure and reliable. LITRG explain all the options in their general guidance.
Employers must also complete certain forms after the end of the tax year for example, P60s or P11Ds (benefits and expenses form) – more information is available in the dedicated ‘End of Year process’ section of the site. Specific information, if you are a care and support employer, on the tax implications if your carer or personal assistant lives with you, is also available.
Paying HMRC – every month or quarter (usually quarter for small employers), you must pay HMRC the amounts of tax and NIC you have deducted from your employee. The good news is that because of something called the Employment Allowance, many small employers, including care and support employers, do not need to pay HMRC any employer’s National Insurance on top of the amounts deducted from employees.
Pensions auto enrolment (workplace pensions) - Every employer with at least one member of staff has a responsibility of putting those who meet certain criteria into a workplace pension scheme and contributing towards it. This includes those who hire a carer or personal assistant. Direct payment users should speak to their Local Authority (or NHS/DWP as appropriate) 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 in their general guidance (including how the auto enrolment rules apply to those with part-time or casual staff) 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.
National Minimum Wage/National Living Wage - Employers must pay staff the correct minimum wage for their hours worked. They may also have to make payments to workers if they are sick or become a parent. LITRG’s general guidance gives an overview of the main rules.
LITRG’s specialist guidance for care and support employers looks more closely at aspects that may be of particular relevance to those hiring a carer or personal assistant, for example, the rules on ‘live-in’ staff and travel time and deductions, which can be difficult for workers and employers alike, to understand.
Other – other useful resources include payroll checklists, a payroll calendar, and a payroll data card. LITRG provide links to other information in areas outside of tax (for example employment law) and to more detailed, technical guidance on GOV.UK (which can sometimes be hard to find!) throughout the new section.
The website also contains a comprehensive section on dealing with HMRC if you have additional needs or need extra support.
Becoming an employer is a big responsibility and may seem like a daunting prospect, but all LITRG’s material, when taken together, will hopefully provide you with sufficient background knowledge to help you feel confident in what you need to do and understand where to get further support if you need it.
If you have any comments about LITRG’s guidance, or have any suggestions about additional material that could be featured, please get in touch through their ‘contact us’ facility.