Domestic workers

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Domestic workers
  • Simplified PAYE deduction scheme now withdrawn
  • Limited exemption from online filing
  • Payroll agencies
  • Domestic staff provided by agencies
  • Board and lodging provided for home care workers

Domestic workers are those engaged to provide services in a private residence. Examples of domestic workers include cleaners and nannies.

Over the years, those engaging domestic staff have often tried to persuade them that they are self-employed or encouraged them to provide their services through a service company of some kind to avoid having to get involved with the operation of PAYE.

The normal rules apply in deciding whether such workers are employed or self-employed (see the Employment status tests guidance note). There is a special rule which deems office cleaners to be employed earners for National Insurance purposes (see ESM4018), but this does not extend to domestic workers who are cleaners.

If the status tests establish that the worker is an employee, the person for whom they provide services is the employer and should register for PAYE if the employee is paid more than the NIC lower earnings limit (£112 per week for 2015/16), although no income tax and National Insurance contributions (NICs) are due if the employee earns less than the secondary threshold (£155 per week for 2015/16). The employer should also register for PAYE if he knows that the employee also has another job elsewhere.

The GOV.UK website  provides a useful starting point for anyone taking on a domestic employee for the first time.

Simplified PAYE deduction scheme now withdrawn

HMRC used to offer a simplified version of PAYE to be operated by those employing domestic workers in their own homes, but this scheme was withdrawn from 5 April 2014.

Now that the simplified scheme has been withdrawn, all employers of domestic staff have to apply

More on Particular types of employee: