PAYE23010 - employer records: employer types: care workers / direct payments
Overview
Agency Staff
Practicability of PAYE
Care workers who claim to be self-employed
Care worker is related to the person being cared for
Overview
There are an increasing number of people who need a carer to
assist them because of a disability or simply getting older. Some
of these people receive funding for the provision of care.
One source of funding is by virtue of The Community Care
(Direct Payments) Act 1996. This enables local authorities to make
direct cash payments to individuals who are assessed as being in
need of care. This, in turn, enables people who need care to
arrange and pay for the relevant care services themselves. Another
source of funding is the Independent Living Fund which is a
Government financed charitable trust set up to give financial
assistance to disabled people to enable them to live independently.
People who receive funding may employ care workers or pay an
agency to provide care services. Where they pay an agency to
provide care services they
will not normally need to operate PAYE and account
for NIC in respect of the carer(s) supplied by the agency. See
'Agency Staff' below.
Where funding recipients engage a carer themselves (see
Note: below) or a relative arranges this on their
behalf
- Create a P or DOME employer record (as appropriate) for the person being cared for
Before setting up an employer record you must always check that
- A PAYE scheme is appropriate
- An employer record is not already in existence
Where the person being cared for is the PAYE employer you must
- Deal with them in a helpful and tactful way
And
- Explain the help available from Business Support Teams and how to contact them
Local Authorities or the Independent Living Fund may give advice
regarding PAYE obligations to funding recipients.
Where they are unable to personally operate PAYE
- Explore the possibility of someone operating PAYE on their behalf (see 'Practicability of operating PAYE' below).
Where you are satisfied that the person being cared for cannot operate PAYE and that arrangements for someone to do it on their behalf cannot be made
- Bring the care worker into Self Assessment (unless they are already in SA, when no further action is required). Remember that the person requiring the care remains responsible for calculating and paying over Class 1 NICs to HMRC see ‘Practicability of PAYE’ below.
Where the carer provides nursing services follow the guidance at ESM 4251-2.
Agency Staff
People who receive funding for the purpose of obtaining care may pay an agency to provide care services. An agency will normally operate PAYE and account for NIC in respect of carers it supplies. Where an agency claims not to be the employer you should seek guidance from the Status Inspector.
Practicability of PAYE
Where it is not practicable for PAYE to be operated by the person being cared for or someone on their behalf
- Do not use a DPNI scheme where the carer operates PAYE and NIC on their own pay as the person requiring care remains responsible for the NICs.
The use of a DPNI scheme may also disadvantage the carer by
affecting their entitlement to the statutory payments, Statutory
Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and
Statutory Adoption Pay.
Further advice on Statutory Payments is available from the
PSN Statutory Payments Group in Longbenton.
Care workers who claim to be self-employed
Where someone engaging a care worker seeks guidance from you because the care worker claims to be self employed
- Issue leaflet IR56 (Employed or self employed? - a guide for tax and national insurance)
If you are asked for advice or an opinion on the status of the care worker
- Refer the matter to the Status Inspector
Care worker is related to the person being cared for
If a carer is employed by their spouse or a close relative in a
private dwelling-house in which both the person employed as the
carer and the person being cared for reside, any payments made to
the carer are not liable to NIC deductions. PAYE is deducted as
normal. ESM4015 provides more detailed information.
When you create a new employer record and the information
obtained confirms that the employer and the employee are related
and they both live at the same private house you must
- Allocate scheme type P or DOME to the employer record, as appropriate
- Use EBS Function AMEND EMPLOYER NOTES to note that NIC is not due.
It is important that no other scheme types are allocated to the employer record.
