Need a little help? Employing a nanny, carer or other home help

Published by on 10 August 2021

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Recent events have illustrated the importance of having a good support network around us during the difficult times. For those that need a little extra assistance, whether it be to enable you to carry on working or to provide specialist support for a loved one, one option is to turn to those outside of the family.

This kind of help can be obtained through specialist agencies who take on the various responsibilities of employing the nanny, carer, or helper and invoice you for the costs. However, what are your obligations from a tax perspective if you appoint someone directly yourself, whether it be a friend or someone that has been recommended to you?

The starting point is to establish whether that person is running a business in their own right and therefore returning their income to HMRC on a self-employed basis or is trading via a limited company. The position may appear obvious, if for example they are advertising their business in local press, or the company’s name appears on the Companies House website. However, if there is any doubt, it would be recommended to obtain written confirmation from them advising that the income is being reported to HMRC and ask them to include a note of their tax reference for them personally or the company.

If that person is not self-employed, you need to consider what your obligations are as the direct employer, which may include registering for PAYE, running a payroll and reporting online to HMRC. Any Income Tax and employee’s National Insurance contributions due will need to be calculated and deducted from the individual’s earnings. The amounts collected will then need to be paid over to HMRC along with any employer’s National Insurance contributions that may be due. These are paid on a quarterly basis unless the amount exceeds £1,500 per month, in which case monthly payments are required.

Where none of your employees are paid more than £120 per week, there is no requirement to register for PAYE provided the employees don’t receive expense and benefits, and don’t have another job or receive a pension. However, payroll records do still need to be maintained.

Obviously, your responsibility as an employer extends far beyond the more obvious tax considerations.

This may start with the need to check whether the individual has the right to work for you in the UK and for certain roles whether you need to arrange a Disclosure and Barring Service check to establish if they have a criminal record.

You will also need a formal contract of employment, consider minimum wage legislation, establish whether a workplace pension is required and have employer’s liability insurance in place. If you provide any employment benefits to the individual in addition to the salary that you pay them, these will need to be reported to HMRC. Some expert guidance may be required in these different areas.

If you would like to discuss the tax implications of employing additional support at home, then please get in touch with us today.

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