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Published on 2 May 2018

Care workers – challenges of the tax and benefits system


This report outlines the challenges that the tax and benefits systems present to care workers – many of whom are already grappling with practices such as non-payment of travel time and zero-hours contracts – and puts forward a number of recommendations for reform.

Care workers – challenges of the tax and benefits system
©Shutterstock/Ocskay Bence

The report highlights that the National Minimum Wage (NMW) Regulations do not provide sufficient protection for care workers.

For example, they do not require travel time and expenses to be paid as separate items, even though they stipulate that a care worker’s pay should average out at the minimum wage after factoring in the time they spend in the client’s home, time spent travelling between their different clients and their associated out-of-pocket expenses.

This means that care workers are often only paid for client ‘contact’ time albeit at a slightly higher rate than the NMW base rate, thus increasing the likelihood of minimum wage underpayments. Problematic zero hours contracts facilitate the arrangements by which only ‘contact’ time is paid for.

More worryingly, minimum wage legislation does not cover travel between home and place of work under any circumstances, which can leave care workers out of pocket considering their typical working patterns and long gaps spent at home. 

All of these things then have confusing knock on effects for a care workers’ tax and benefits position, meaning that the non-payment of travel time and zero-hours contracts are often just the beginning of their problems.

Among our recommendations are that the Government should:

  • Consider options for providing relief to non-taxpayers for their travel expenses (e.g. by allowing carry forward or carry back of claims in certain circumstances, or by allowing claims to National Insurance relief).
  • Change minimum wage rules so that care providers must pay travel time as a separate item, or change tax credit rules to accept unpaid travel time as remunerative hours of work so that workers receive the support they need.
  • Do more to ensure that tax credit and universal credit claimants are aware of their right to deduct unreimbursed expenses from their income, and the limitations of Real Time Information data in this respect.
  • Proceed cautiously with their plans to impose strict conditionality rules for care workers on zero-hours contracts who claim universal credit.
  • Consider how care workers who are not currently earning above the Lower Earnings Limit might be able to cheaply access the National Insurance contributions and benefit system.

Our report can be found below

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