Are you taking on a carer for yourself or a relative of yours and do you understand their employment status?
Employing a permanent or live in carer brings with it the same obligations as any business taking on an Employee. By law, therefore, an Employer will need to account for Income Tax and National Insurance Contributions on the salary paid to the carer.
There seems to be a general misconception that carers working in a private home that they can be self-employed. In most cases, carers should be treated as employees as per HMRC guidance.
Older and disabled people also acquire Employer status when using the Direct Payments or Personal Budgets they have received from Social Services to take on someone to help with their daily needs such as cooking, washing, dressing, driving etc.
Some care agencies advertise that the permanent carers that they recruit for their clients are self-employed. If the carer is being paid directly by the person requiring the care or member of their family and not the agency then it is likely that they will need to be employed.
The only time that a carer will not be an Employee is where:
• The person taking on the carer contracts directly with an agency and a rate is paid to the agency for use of that carer. This is most likely where a temporary carer is required. The carer will then normally be an employee of the agency who will operate PAYE on their behalf.
• A series of carers is provided by an agency on a rotation or ad hoc basis. In this case, if the agency does not employ them, the carers may be eligible for self- employed status.
• A part-time carer appointed who works ad hoc hours and has other clients. In this case there may be scope for the carer to be self-employed.
A carer’s salary may be quoted gross ie PAYE and Employees NI are deducted from the salary and the net paid to the carer, or the salary may be quoted net of deductions (i.e. the amount they wish to receive in their hand). It is the Employer’s responsibility to pay over to HMRC, PAYE, Employees National Insurance and Employers National Insurance in addition to the net salary paid. Expenses paid and benefits provided on behalf of a carer in addition to her salary may be liable to a separate charge to Tax and National Insurance.
If HMRC catches up with an Employer who has failed to declare their employee for tax purposes or has tried to maintain that he/she is self-employed, then HMRC will seek redress from the employer and they will be liable to pay the correct Tax and National Insurance Contributions and interest and penalties. There is no legal right to seek repayment from the carer.
For more information or help in determining the employment status of a carer contact us at Taxing Carers on 020 8882 6847