Paying informal carers

Updated on 31 March 2023

Disabled people and carers

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.

Illustration of people with disabilities

How do I know if someone is a volunteer helper or if I might be employing them?

If you pay someone for helping you, they may be treated at your employee – see our separate page about Taking on your own PA.

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.

What are the tax and other issues if I pay someone’s expenses when they help me 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.

What are the tax and other issues if I pay someone more than just their 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 as ‘miscellaneous’ income to HMRC, as confirmed in this HMRC guidance).

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

What are the tax issues on gifts I make to people who help me out?

Volunteers can be provided with a token of appreciation, as long as it is not 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 (‘payment in kind’) and again, their value is potentially taxable as either employment income or miscellaneous income.

Where can I find more detailed information?

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

Tax guides

Introduction to the tax system How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax I have overpaid through PAYE on wages or pensions? How do I claim back tax if I complete a tax return? How do I claim back tax if I am taxed under the Construction Industry Scheme (CIS)? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance (PPI) pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Specified Adult Childcare credits? What is Scottish income tax? What is devolution? Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? Tax relief on your pension contributions HMRC digital services Enquiries, penalties, appeals, complaints and debt Enquiries How to survive an enquiry by HMRC Tax penalties Tax appeals Alternative Dispute Resolution How do I complain to HMRC? What if I cannot pay my tax bill? What if I have a tax credits overpayment?

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Am I employed, self-employed, both, or neither? How do I register for tax and National Insurance? What business records should I keep? Working out profits, losses and capital allowances When do I make Self Assessment payments and file my tax return? How do I pay tax on self-employed income? What tax allowances am I entitled to? What is the trading allowance? What National Insurance do I pay if I am self-employed? What is the Construction Industry Scheme (CIS)? Tax checks for taxi, private hire and scrap metal licences How do I work out my profits for universal credit? Do I have to pay VAT if I am self-employed? What is Making Tax Digital for VAT? Pensions and self-employment How do I repay my student loan if I am self-employed? Introduction to enquiries

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Going abroad Other income Student loans Types of student Volunteering and training Working Do students have to pay council tax? Glossary of Forms Jargon buster Where can I get further help and information?

Help for employees and the self-employed Help for employers Independent living Caring for someone VAT reliefs for disabled and older people Trusts for disabled people Apprenticeships and disability

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