Agency workers

Other options that can lead to you having your own PA and things to watch for

If you are looking for someone to help you live independently at home, there are other options that can lead to you having your own personal assistant (PA):

  • Your local social services department (Local Authority or council) can provide one of their own staff to act as your PA or may commission the service from a private provider; or
  • You can hire a PA through a home care agency

Local social services department
Care agency
Finding a reputable home care agency
Important information about ‘self-employed’ agency workers
Where to look for further guidance on self-employed agency workers
Why else might I need to consider whether the agency worker is under my supervision, direction or control?
Important information about agency workers from an 'offshore' agency

Local social services department

Your local council may be able to provide one of their own staff to be your PA and help you with your social and care needs or they may commission the service from a private provider. If you do this, you will not have any responsibilities as an employer because the PA will be employed by your local council or the private provider.

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Care agency

You may ask a local care agency to find you a suitable personal assistant.

If you take on a personal assistant through an agency, the agency will be the employer and will be responsible for many things such as deducting tax and National Insurance contributions (NIC).

However the rates may vary between agencies and may appear higher than employing someone directly as the agency will be responsible for all underlying employment costs such as auto-enrolment, holiday pay and sick pay.

One advantage of using an agency is that they will be able to provide cover if your personal assistant is off sick or taking a holiday. The disadvantage is you may be sent different staff rather than building a relationship with just one person.

You should discuss this with any agency you are thinking of using.

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Finding a reputable home care agency

Finding a personal assistant that is right for you is extremely important. If you would like to use an agency to help you, the Care Quality Commission and the United Kingdom Home Care Association may be useful to you as they can give you some information on what to look for when looking for an agency to supply your PA.

Their websites (below) allow you to search for home care agencies in your local area and contain inspection reports on individual home care agencies.

Care Quality Commission

United Kingdom Home Care Association

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Important information about ‘self-employed’ agency workers

In general, agency workers should be taxed through Pay As You Earn (PAYE) – this is operated by the agency that the worker signs up with, rather than the ‘end client’ that the worker is placed with. (End client is the person who receives the services of the care assistant. So if you used an agency to provide you with a care assistant, then you would be the end client.)

Where the agency has to operate PAYE then it also has to pay employer National Insurance in respect of the employee's wages. This is a cost to the agency, however, it is usually covered in the fee that is charged to the end client by the agency.  

In recent years, some agencies have been trying to avoid having to operate PAYE for workers – this means that their costs are reduced, the benefit of which is sometimes passed on to the end client. They do this by saying that the worker is 'self-employed', so that the worker has to pay their tax and National Insurance to HMRC themselves and there is no employer National Insurance to pay (the agency’s only real role then, is to match the worker to the end client).

However, treating a worker as ‘self-employed’ when they should actually be treated as an ‘employee’ leaves the worker in a vulnerable position and means that the Government is losing money. Therefore from 6 April 2014, the Government have tightened up the rules to prevent agencies being able to do this so easily.

The new rules essentially say that the only time a care agency can escape operating PAYE is where the worker is under NO supervision, direction or control by the end client. As such, and as part of the sign up process, they may ask the end client to complete a checklist or questionnaire, in writing for their records, so that they can establish whether the worker will be under supervision, direction or control (and thus, whether they have to operate PAYE).

If you decide to use an agency to provide you with a care worker and you find yourself in the situation where you are asked questions about what supervision, direction or control the worker will be under, you must ensure you answer these questions very accurately and carefully. In the event of an enquiry by HMRC, such documents will be closely examined and HMRC could come to you instead of the agency for any unpaid PAYE in situations where it should have been operated but was not, depending on their interpretation of the information provided by you to the agency. 

You should be aware that from 6 April 2015, agencies must send details to HMRC of workers they place with clients who are not being treated as employees and where they didn’t operate PAYE. This means HMRC will have much more visibility over agency worker engagements.

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Where to look for further guidance on self-employed agency workers

HMRC have developed extensive guidance which includes examples of where HMRC would consider the manner in which the worker provides their services is and is not subject to supervision, direction or control.

From the guidance, we can see that HMRC consider supervision, direction and control are best defined as follows:

Supervision is someone overseeing a person doing work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person where appropriate in order to develop their skills and knowledge.

Direction is someone making a person do is/her work in a certain way by providing them with instructions, guidance or advice as to how the work must be done. Someone providing direction will often coordinate how the work is done, as it is being undertaken.

Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.

They also give a helpful example of where they think supervision, direction and control would not apply in the context of a care worker (see page 14 of the document accessed through the link). However where you give instructions to the care worker and have procedures which must be followed by them, it is likely there will be supervision, direction or control over the manner in which the services are provided and therefore a PAYE obligation on the agency.   

It may be tempting to give the agency information which means that they do not operate PAYE, as this may mean lower costs for you. However where there is any element of doubt, then it is best to err on the side of caution and tell the agency that the worker will be under your supervision, direction and control, so as to protect yourself from any problems with HMRC later down the line. 

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Why else might I need to consider whether the agency worker is under my supervision, direction or control?

Agency workers often work on lots of different engagements and may incur substantial travel costs in getting to their various work locations. If they are not entitled to relief for their travel expenses under the normal tax rules, some of them use a loophole in the law which means they claim relief on their travel and subsistence expenses when it would not normally be available. 

From April 2016 the Government will try to close this loophole by saying that agency workers (and other temporary workers employed through an employment intermediary) will be prevented from claiming relief on their travel and subsistence expenses if they are under the supervision, direction or control, of any person, in the manner in which they undertake their role.

As such, from April 2016, you may be asked whether a worker who is supplied to you by an agency is under supervision, direction or control (or the right thereof) in the manner they under take their work. Please note that workers are assumed to be under supervision, direction or control, unless it is shown otherwise.

You can find more information about the April 2016 travel and subsistence changes here.

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Important information about agency workers from an ‘offshore agency’

If the agency that you use is an offshore agency, please be aware that in some circumstances, you – the end user – may be obliged to operate PAYE and NIC.  

HMRC’s guidance on the matter can be found in their Employment Income Manual.

Although offshore agencies are not as prolific as they once were, it is important to ensure you check whether the agency that you are using has a trading address in the UK.  Please remember that the Isle of Man and the Channel Islands (e.g. Jersey and Guernsey) are ‘offshore’ in this context.

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