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From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages is reduced from 12% to 10%. From 6 April 2024, the main rate of self-employed class 4 NIC will reduce from 9% to 8% and class 2 NIC will no longer be due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. Our guidance will be updated in full in spring 2024.

Updated on 6 April 2023

Paying informal carers

If you need care, you may receive occasional help from family, friends or neighbours. You might pay them for their help, or just reimburse their expenses or give them small gifts like flowers or chocolates as a thank you. In order to avoid tax implications, it is important to understand the rules around volunteer payments.

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Volunteer helper or employee?

If you pay someone for helping you, they may be treated at your employee – see our separate page about Employing a carer.

Even if you do not think you are employing someone, you need to be careful. If an individual helps you out on a regular basis, carries out specified duties and is subject to some level of supervision and control, a number of the hallmarks of employment are present.

However, there could be other factors pointing away from employment. For example, if they only help you out occasionally, they are free to turn down helping you out and can leave when they wish. Bear in mind that an employment relationship need not be set out in a written contract; rather, it can be oral, or inferred from the circumstances.

Paying expenses when someone helps you out

Broadly, if you only reimburse any actual out-of-pocket expenses the volunteer has incurred, then there will be no tax or NIC to deal with for either you or the volunteer. The expenses paid must be supported by receipts or be a reasonable estimate of the cost.

Paying more than just expenses

If the expenses paid are more than the actual expenses incurred (or accepted scale rates in the case of mileage) or you give the volunteer some other type of payment, HMRC may consider the volunteer to be receiving a payment for their services. The money could be treated either as employment income (meaning you may have to operate PAYE like any other employer) or as other taxable income (meaning the volunteer may have to declare it to HMRC themselves as miscellaneous income).

There may also be further complications, such as in connection with the minimum wage to consider.

Giving someone a thank you gift

Volunteers can be provided with a token of appreciation, as long as it is not of high value.

However, the gifts should be genuine, one-off thank you gifts. If there is a sense that chocolates or flowers for example, are expected, hinted-at or regularly given, or are a reward for services performed, then they become payment for work done (known as payment in kind) and again, their value is potentially taxable as either employment income or miscellaneous income.

More information

For more detailed information on the considerations around making payments to volunteers, see our separate page of guidance.

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