Ask the Expert: If I employ a carer, do I have to deduct tax and pay workplace pension?
PUBLISHED: 06:00 08 December 2018 | UPDATED: 08:28 08 December 2018
This week Carl Lamb, managing director of Almary Green, answers questions on employing carers or domestic help.
My wife’s health has been failing quite badly over the last few months and we have decided to employ a carer to live with us full time.
We are fortunate enough to be able to afford to pay for this ourselves.
Do I need to deduct tax from what I pay her?
Yes, if you pay for someone to work for you – carers, domestic help, gardeners – you are an employer and so must comply with employment rules.
This will mean that you need to register as an employer, deduct any tax and National Insurance due as well as pay employers’ National Insurance contributions.
In addition, under the Workplace Pension regulations, you may also have to set up a workplace pension scheme and automatically enrol your employee into it once he or she meets eligibility requirements.
You would need to meet these employer obligations even if you were getting funding for your carer from the Local Authority via direct payments or from the NHS.
There are other implications too: you will need to provide an employment contract and payslips, for example. You will also need to think about your employee’s eligibility for sick pay, holiday pay, etc.
You can get help with this on the Government’s website and for the pension implications on the Pension Regulator’s website.
If you decide that this is too complex for you to manage, then the alternative may be to use an agency to provide a carer.
This would pass responsibility for all the payroll administration to the agency, although that may, of course, have implications on the cost to you.