⚠️ We are currently updating our 2020/21 tax guidance across the website
Help and support for those taking on a personal assistant
Employing a carer or personal assistant (PA), whether funded through government money, or privately, brings with it many responsibilities such as registering as an employer with HM Revenue & Customs (HMRC), operating a Pay As You Earn (PAYE) scheme, arranging a workplace pension and paying at least the minimum wage.
LITRG’s website, Disability Tax Guide (DTG), contains guidance on all of these topics.
The rest of this page briefly explains the main considerations when taking on a PA and the support available from our DTG website.
Tax employment status – for example, is your PA employed or self-employed?
The most important point to understand is that a person taking on a PA cannot just ‘decide’ that their PA is self-employed. Doing this can be attractive because it removes many responsibilities from the person taking on the PA and can save them some money. However it is the responsibility of anyone taking on a PA to check the status carefully. The DTG website has more detailed guidance on the general rules surrounding employment status and also a few tips on how to use HMRC’s employment status tool (which is not specifically designed for people taking on a PA).
In response to queries we have received through the contact us facility (more on this below), the website now covers the rules for taking on an agency worker, a family member or a PA who works through their own limited company.
Setting up as an employer
If the PA is an ‘employee’, the next step is probably to register as an employer with HMRC so that a PAYE scheme can be set up. The PAYE regime requires tax and National Insurance to be deducted from most payments made by employers to employees.
An employer must register with HMRC (and thus operate a PAYE scheme) if any of the following are true:
- They are paying them at or above the National Insurance Lower Earnings Limit (£118 per week in 2020/21).
- The employee already has another job.
- The employee is receiving a state, company or occupational pension.
- The employee is receiving employee benefits.
This is an easier process than it sounds and we provide step-by-step guidance on the website.
The website also looks at what is involved when running a payroll – basically it is the process by which the PA’s wages are paid and appropriate deductions (like PAYE tax) are made. In recognition that not all individual employers will want to run their own payroll, there is also guidance on finding a payroll provider to help with payroll tasks.
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 on the DTG 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, a payroll program will be required and there are several options on the market including some free ones. We explain all the options on the DTG website. For employers choosing to use HMRC’s free Basic PAYE Tools (BPT) payroll program, we provide a unique tool on the site that enables website users to create a payslip – something that BPT cannot do. This has proven to be one of the most used features of the website.
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.
Pensions auto-enrolment (workplace pensions)
Every employer with at least one member of staff now has a responsibility of putting those who meet certain criteria into a workplace pension scheme and contributing towards it. This includes those who take on a PA. 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 do not 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.
We summarise the main aspects of auto-enrolment on the website (including how the auto-enrolment rules apply to those with part-time or casual PAs) 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. Of note is the special support given by The Pensions Regulator to those employing staff in their home, such as a PA.
National Minimum Wage/National Living Wage
Employers must pay staff the correct minimum wage. The DTG website gives an overview of the main rules – and then looks more closely at aspects that may be of particular relevance to employers of PAs, for example, the rules on ‘live-in’ PAs and travel time and deductions, which can be difficult for workers and employers alike, to understand.
The website contains a comprehensive section on dealing with HMRC if you have additional needs or need extra support and signposts users to organisations that can provide help with topics outside of our immediate area of expertise (for example, employment law).
There are also clear and easy to understand factsheets to download on many key subjects (such as Employment Status, Registering as an Employer and Auto-Enrolment) and other useful resources such as an introductory flipbook ‘Taking on a personal assistant – a basic guide’, payroll checklists, a payroll calendar and a datacard.
For an overview of what else you can find on the Disability Tax Guide website, watch a short video entitled, ‘Introduction to Disability Tax Guide’.