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  • Tax and National Insurance when employing people in your home

Tax and National Insurance when employing people in your home

If you take someone on to work in your home - like a nanny, cleaner, carer or other domestic staff - you may be legally classed as their employer, and may have to deduct Income Tax and National Insurance contributions from their wages through the PAYE (Pay As You Earn) scheme.

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Who counts as an 'employee'?

Sometimes it's very easy to decide whether or not someone is your employee. For example, if you take on someone who has replied to your advert, where they follow your directions and work only for you, they will 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 and paid by agencies, which mean that the agency has to operate PAYE. If an agency supplies someone to work in your home and you (not the agency) pay the worker, contact HM Revenue & Customs (HMRC) regarding PAYE.

There are also special rules for deciding if someone is employed or self-employed. This is called their 'employment status'. Read HMRC related guide below to find out more - if they are self-employed you don't need to worry about operating PAYE.

Read more about how employment status is determined

Contact details for HMRC employer enquiries

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When you must operate PAYE

Whether or not you need to operate PAYE (deduct Income Tax and National Insurance contributions from their pay and pay employer's National Insurance contributions) depends on your employee's overall earnings. The figures below are relevant for the tax year 2013 to 2014.

If you pay them more than £153 a week

If you pay your employee more than £153 a week you'll have to operate PAYE.

If you pay them between £111 and £153 a week

If you pay your employee between £111 and £153 a week inclusive and this is their only job and they don't get other taxable income, there are no tax or National Insurance contributions due, but you'll need to keep a record showing how much you pay them.

If you pay them less than £111

If you pay your employee less than £111 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 have another job or other taxable income

If your employee has another job - or other taxable income, such as a pension - you'll need to operate PAYE no matter what they earn. This is because their tax-free allowances will normally be set against the pay from their main job or pension, which means tax may be due on their earnings from you.

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Simplified PAYE Deduction scheme for care or support employees – closed 5 April 2014

The Simplified PAYE Deduction Scheme was a way of operating PAYE which required less form filling than the PAYE schemes operated by most employers. However this scheme closed for new registrations on 5 April 2012 and for existing users on 5 April 2014.

If you used a Simplified Deduction Scheme for a carer or support employee, find out about changes to the way you report PAYE to HMRC by following the link below.

Employing a carer or other domestic help in your home

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Registering as an employer

Where you have an obligation to operate PAYE you should contact HMRC to register as an employer and HMRC will send you everything you need.

Find out more about how to register as an employer

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Avoiding employing someone illegally

Bear in mind that if you're going to employ someone from outside the UK, you'll need to make sure that they're entitled to work here before they start working for you. The government has recently introduced checks that you must make on all new employees to safeguard you from employing someone illegally.

Find out on GOV.UK website if a potential employee has the right to work in the UK and what documents you will need to check.

Check if someone can work in the UK

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Using a payroll agency

If you don't want to operate PAYE yourself, there are payroll agencies that will do it on your behalf. You send them details of your employee's gross wages (before tax) and they operate PAYE and prepare payslips for you. The responsibility for PAYE remains yours where you engage a payroll agent to act on your behalf.

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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 are part-time or temporary - has employment rights.

Learn about employee rights and employer obligations on the GOV.UK website (Opens new window)

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Where to get help

You can get help by ringing our New Employer Helpline on telephone: 0300 200 3211, open Monday to Friday 8am to 8pm and Saturday 8am to 4pm.

New employer - getting started

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More useful links

Taking on a new employee

Employer operating PAYE in real time

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