The number of elderly or infirm people who employ a care worker or personal assistant to attend to their day-to-day needs has been increasing quite dramatically over the past few years.
Although the funding for such carers or personal assistants appears to be split between being privately funded or funded by the NHS England or local authorities, the relationship between the service user and the care worker/assistant is predominantly one of employer and employee. This means that the employer must operate PAYE and NIC on their care worker’s wages, as well as operate Statutory Sick Pay and other statutory payments. Often the role of employer (the one giving the instructions – not necessarily the one receiving care) is then taken by another family member. These particular schemes are known as “Care and Support” (C&S) Employers.
In an attempt to reduce the administrative burden that operating a PAYE scheme imposes, HM Revenue & Customs (HMRC) tries to operate a light touch where C&S Employers are concerned. Firstly, unless the person undertaking the role of employer already operates a PAYE scheme (for example they are in business for themselves and employ staff) and has to file under the HMRC scheme called RTI (Real Time Information), a C&S Employer is required to file only quarterly PAYE Returns on paper (albeit within 14 days of the end of the quarter). This recognises that the actual Employer is likely to either be the elderly or infirm individual themselves or a family member (possibly operating under a Power of Attorney) who is not professionally or business trained. In allowing this relaxation of the RTI PAYE filing obligations, the need for expensive computer systems and payroll software can be avoided as well. The exemption from RTI filing can only be claimed if it is the employer who files the quarterly return and not some other person on the employer’s behalf. This means that if you hand full responsibility of the PAYE scheme to a payroll bureau you will not qualify.
Further relief is also imminently available in that from April 2015, the £2,000 exemption from secondary National Insurance Contributions introduced to help businesses will be extended to C&S Employers as well. Introduced in April 2014, the £2,000 allowance was initially denied to all domestic employers – including C&S Employers – but the relaxation announced in the Autumn 2014 Budget comes after detailed negotiations between HMRC, Disability Rights UK and the Low Income Tax Reform Group. To claim the £2,000 allowance, it is important that you file as a C&S Employer. This is specifically defined as an individual who employs a person to provide domestic or personal services at or from the employer’s home where the recipient of the services (who may either be the employer or a member of the employer’s family) has a physical or mental disability, is elderly or infirm.
Finally, there is some further good news for C&S employees. Also included in the Autumn statement was an exemption for board and lodging provided to “Home Care Workers” which otherwise could be construed as a benefit on which they would be taxed and will be introduced in 2016/17 when the current threshold between lower paid and higher paid employees of £8,500 is removed
(Yes, HMRC still consider anyone paid more than £8,500pa as a “Higher Paid” employee)
For further information on any of the above points or to discuss your tax affairs generally, please do not hesitate to contact Robin Beadle.