Employment status exceptions
Situations where employment status rules vary
We only outline the general rules in our deciding the status of your personal assistant section. For most people employing a personal assistant (PA) these rules will be sufficient in deciding whether their PA is employed or self-employed. However, there are some groups who have special rules applied when working out employment status.
Here we draw attention to a few of these groups.
If you decide to hire a PA through an agency, you will generally not need to worry about tax employment status or tax and National Insurance. The care agency will be responsible for deciding the PA’s status and paying their tax and National Insurance over to HMRC. The PA will normally be employed by the agency rather than you. Instead you will enter into an agreement with the agency which sets out what tasks the personal assistant will cover and the terms and conditions covering your payments to the agency and other important issues.
Find out more about using an agency, including some things to be wary of, in our section on agency workers.
However there are some agencies who act as finders of PAs only. Often this is where you require someone to live-in with you. In such cases, you will still need to decide the status of your personal assistant once they have been matched with you (see deciding the status of your personal assistant section).
Employing a family member
For National Insurance contribution purposes only, if someone is employed by a family member in a private home in which both family members (i.e. the employee and the employer) live, then the employment is disregarded for NIC purposes only. This exception will not apply if the employment is being carried out for the purpose of any trade or business by the employer.
The family members that count for this purpose are:
- father or mother
- grandfather or grandmother
- son or daughter
- grandson or granddaughter
- stepfather, stepmother, stepson or stepdaughter
- brother or sister
- half-brother or half-sister
See the HMRC website for information about this exception.
Direct payments cannot usually be used to employ a close relative who lives in the same household as the person receiving care, so we would not expect to see this special rule being relevant very often.
You may receive occasional help from family, friends or neighbours. Even though you will not pay them for such help, you may give them flowers or chocolates as a thank you and/or reimburse any out of pocket expenses such as travel expenses – for example if they run an errand into town for you. You may be wondering if there are any tax implications. Let’s look at the rules around ‘voluntary workers’.
According to this HMRC guidance, a person who does voluntary unpaid work will not normally be engaged under a contract of employment. If there is no employment, it follows that the reimbursement of any expenses incurred by voluntary workers carrying out their voluntary work will not be liable to income tax. Neither will the reimbursement of any extra costs that might be incurred for example, travel expenses between home and work.
The expenses paid must be supported by receipts or be a reasonable estimate of the cost. If the expenses paid are more than the actual expenses incurred (or accepted ‘scale rates’ in the case of mileage) HMRC may consider the voluntary worker to be receiving a wage or salary for their services and the payment could be treated either as employment income or as other taxable income.
With regards to gifts, it should be noted that volunteers can be provided with a token of appreciation as long as it is not high value. However the gifts should be a genuine, one-off thank you gifts – if there is a sense that chocolates or flowers for example, are expected, hinted at or regularly given, or are a reward for services performed, then they become payment for work done and are potentially taxable.