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If you take someone on to work in your home, like a personal assistant/carer, you will probably be legally classed as their employer.
If you are, you may have to deduct Income Tax and National Insurance contributions (NICs) from their wages through the Pay As You Earn (PAYE) scheme.
Who counts as an ‘employee’?
There are some complicated rules for deciding if someone is your employee
Sometimes it’s very easy to decide whether or not someone is your employee. If you take on someone who has replied to your advert and they work only for you, they’ll almost certainly be your employee.
On the other hand, if you buy services from a business that has several employees and works for several customers, that business is the employer, not you.
Special rules apply to workers supplied by agencies, which mean that the agency has to operate PAYE.
Does how much you pay make a difference?
The answer is yes it does.
Please see below for guidance. These figures apply to the April 2005 - April 2006 Tax Year.
More than £97 a week
If you pay your employee more than £97 a week you’ll have to:
Between £82 - £97 a week
If you pay them more than £82 a week, but no more than £97, there is no tax or NICs due, but you’ll need to:
(This is because pay over £82 counts towards your employee’s basic State Pension.)
£82 or less a week
If you pay your employee £82 or less a week and they don’t have another job elsewhere (or other taxable income such as a pension) you don’t have to do anything.
If they do have another job you’ll have the same obligations as an employer paying over this amount. This is because their tax-free allowances will normally be given against the pay from their main job or pension.
Who can do all this for me?
Using a Payroll Agency
The simplest method of ensuring that all your tax and National Insurance issues are taken care of is to use a payroll agency.
They will:
Your Employee's Rights
As well as dealing with your employee’s tax and National Insurance Contributions, you also need to be aware of your other obligations as an employer.
Anyone you employ, even if they’re part-time or temporary, has employment rights.
Some of the better payroll agencies offer you employment law support so that you get:
If you are interested in outsourcing your payroll, you can
call Enable Payroll on 0845 226 2213 for more information
or visit our website www.enable-payroll.co.uk
Special Discount 10% off - Please mention 'Enable Together Offer' when you call, to receive a discount when you subscribe.
Using a Simplified PAYE Scheme
If you want to do the PAYE and NI yourself then you can use a simplified PAYE scheme (the Simplified Deduction Scheme) if you pay a domestic employee up to £160 a week (or £700 a month).
For more information you will need to contact the Inland Revenue on: 0845 60 70 143
