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Help with the tax implications of engaging a personal assistant

If you employ a personal assistant (PA) or carer through a social care direct payment, personal health budget or with your own money, you may be responsible for money matters such as tax, National Insurance, paying wages and keeping records.

To help you as an employer, or for those who support individual employers, the Low Incomes Tax Reform Group (LITRG) has set up a website that brings together all the information you might need in one place. It’s called the Disability Tax Guide website and you can access it here: www.disabilitytaxguide.org.uk.

We’ve spoken to the group about the most common issues employers report when taking on a PA, and how they can help. Here’s what they said… 

 

The tax employment status of your PA

This is whether your PA is employed or self-employed. This is important as it will affect how much tax and National Insurance your PA pays.

The most important point to understand is that an individual can’t just ‘decide’ that their PA is self-employed. Making a PA self-employed can be attractive because it removes many responsibilities from the employer; however it’s their responsibility to check the status carefully.

Where to find help:

HMRC’s Employment Status Indicator can help you work out your PA’s tax employment status.

You answer questions about your PA’s working arrangements and the tool will tell you whether they’re employed or self-employed. You’ll get a form at the end which can be saved for future reference, should HMRC ever challenge the decision.

The LITRG’s website also has more detailed guidance about employment status.

 

Taking on an employee and setting up as an employer

If your PA is an ‘employee’ and meets the criteria below, you’ll need to register as an employer with HMRC so that a payroll can be set up.

*If you’re paying them £112 or more per week (this is the National Insurance Lower Earnings Limit in 2016/17 and may change each year)

*If your PA already has another job.

*If your PA is receiving a state, company or occupational pension.

*If your PA is receiving employee benefits.

Where to find help

To register as a new employer, call the HMRC new employer number 0300 200 3211. The LITRG provide further registration guidance on their website.

 

Payroll and ‘Real Time Information’

This is the system used for sending information about Pay As you Earn (PAYE) tax and National Insurance to HMRC, usually every payday.

There are two ways the information can be sent - online, or, if certain requirements are met, by paper. Find out more about when paper filing can be used on the LITRG website.

Where to find help

For online filing, you’ll need to download an online payroll programme. There are lots of options out there, including HMRC’s free Basic Payroll Tools (BPT). LITRG have put together a list of all the payroll systems you could use here.

If you choose to use BPT system, you can also access LITRG’s free online tool that enables you to create a payslip for your PAs (currently BPT doesn’t let you do this). 

 

PA pensions and automatic enrolment (workplace pensions)

If you employ a PA who meets certain criteria, you’ll be responsible for putting them into a workplace pension scheme, and you’ll have to contribute towards it.

This process is called automatic enrolment. Your PA doesn’t need to do anything, however there are steps you need to do as an employer to enroll your PA.

Where to find help

You can read more about automatic enrolment for PAs on the LITRG website here.

The Pensions Regulator can also help if you employ a PA in your home. They also have a planning tool that will show you what you need to do and when.

If you get a direct payment to pay for your PA, you should speak to your Local Authority as there may be money to cover these extra costs. 

 

National Minimum Wage and National Living Wage

As an employer, you must pay staff at least the current minimum wage rate appropriate for their age.

Where to find help

You can find the up-to-date rates from the LITRG here. There is also lots of other information about the rules such as those for ‘live-in’ PAs, travel time and deductions.

The ‘Money matters’ section of Skills for Care’s information hub also provides lots of useful links.

 

Where can I find out more?

The LITRG has published easy to read factsheets that cover the key things you need to know about employing PAs.

Keep an eye on their regular news for the most up to date payroll and tax information. You can also request technical support with tax and National Insurance queries.

Skills for Care’s information hub for individual employers and PAs also has lots of useful information, including specific sections on wages, pensions and tax.

If you’re an individual employer, or you work for an organisation that supports them, you can sign up to the quarterly newsletter for general updates including tax, pensions, funding opportunities and local events.