Employing Domestic help
Discussion
Eric Mc said:
You will also need to register as an "Employer" so that you can administer and deduct the correct PAYE and NI on the domestic's wages.
Welcome to the world of RTI (Real Time Information).
surely not, if 'domestic' is 'self-employed'. i.e. might supply similar services to 2/3 other clients.Welcome to the world of RTI (Real Time Information).
Eric Mc said:
Why would they be self employed?
why wouldn't they be ? a live out part time daily almost certainly could be either , if they were full time and/or live in it'd be rather different...this is also where agencies get their reason to exist by dealing with all this for a commission.
mph1977 said:
why wouldn't they be ? a live out part time daily almost certainly could be either , if they were full time and/or live in it'd be rather different...
this is also where agencies get their reason to exist by dealing with all this for a commission.
There are various HMRC tests to decide whether a person is employed or self employed. For example;this is also where agencies get their reason to exist by dealing with all this for a commission.
Are the hours fixed?
Is the place of work fixed?
Does the individual provide their own tools & equipment ?
Can the individual send another person to do the work?
http://www.hmrc.gov.uk/employment-status/
Based on the HMRC tests I think the person would be considered an employee.
Countdown said:
mph1977 said:
why wouldn't they be ? a live out part time daily almost certainly could be either , if they were full time and/or live in it'd be rather different...
this is also where agencies get their reason to exist by dealing with all this for a commission.
There are various HMRC tests to decide whether a person is employed or self employed. For example;this is also where agencies get their reason to exist by dealing with all this for a commission.
Are the hours fixed?
Is the place of work fixed?
Does the individual provide their own tools & equipment ?
Can the individual send another person to do the work?
http://www.hmrc.gov.uk/employment-status/
Based on the HMRC tests I think the person would be considered an employee.
the reason for that test in HMRC's rules is to stop the scam of 'contractors' being used as employees in office type work becasue of widespread tax and NI fraud -
substitution clause - who arranges holiday cover - does the worker have to book holiday with the employer or just inform them ... ( some companies using agency staff get theimselves into trouble potentially by insisting that the employer apporves leave requests rather than the agency being responsibile to provide x number of bodies each shift)
tools and equipment is a funny one - plenty of employees use their own tools and equipment for parts of their job (most of the employed mechanics and engineering craftspeople/ techs I know have their own tools - often these tools may have been paid for via tool allowances ) at what point does it become 'own tools and equipment' - how many of the health professionals on PH have their basic diagnostic tools such as stethoscope, otoscope/ auroscope ,tendon hammer etc etc etc - i'd guess quite a few , I'm even aware of a list of things which an 'employer'in healthcare specifically excludes from the the requirement to use organisationally supplied tools and equipment ...
mph1977 said:
when you are providing a 'real time ' service the hours and place of work at going to be at the request of the customer
Yes, I know.mph1977 said:
the reason for that test in HMRC's rules is to stop the scam of 'contractors' being used as employees in office type work becasue of widespread tax and NI fraud -
Yes, I know.
mph1977 said:
substitution clause - who arranges holiday cover - does the worker have to book holiday with the employer or just inform them ... ( some companies using agency staff get theimselves into trouble potentially by insisting that the employer apporves leave requests rather than the agency being responsibile to provide x number of bodies each shift)
Yes, I know.mph1977 said:
tools and equipment is a funny one - plenty of employees use their own tools and equipment for parts of their job (most of the employed mechanics and engineering craftspeople/ techs I know have their own tools - often these tools may have been paid for via tool allowances ) at what point does it become 'own tools and equipment' - how many of the health professionals on PH have their basic diagnostic tools such as stethoscope, otoscope/ auroscope ,tendon hammer etc etc etc - i'd guess quite a few , I'm even aware of a list of things which an 'employer'in healthcare specifically excludes from the the requirement to use organisationally supplied tools and equipment ...
Yes, I know. Which is why the it is highly likely that the OP's domestic help is likely to be treated as an employee rather than Self employed.FWIW not ALL the HMRC "tests" have to be passed/failed in determining a person's employment status. It's on the balance of probabilities.
fesuvious said:
Countdown said:
There are various HMRC tests to decide whether a person is employed or self employed. For example;
Are the hours fixed?
Mostly, yes. Although I'd only start someone who had a smidge of flexibility for an hour either side.
Is the place of work fixed?
ahh, well, maybe not. Granted I would suggest the main place would be my home. However, it might also be the other halfs place of work too. Plus of course, when little one starts nursery then on some days we shall want this person to collect
Does the individual provide their own tools & equipment ?
No
Can the individual send another person to do the work?
Technically, yes
http://www.hmrc.gov.uk/employment-status/
Based on the HMRC tests I think the person would be considered an employee.
I think I could argue a good case for not. However, I also think I could argue a good case for!Are the hours fixed?
Mostly, yes. Although I'd only start someone who had a smidge of flexibility for an hour either side.
Is the place of work fixed?
ahh, well, maybe not. Granted I would suggest the main place would be my home. However, it might also be the other halfs place of work too. Plus of course, when little one starts nursery then on some days we shall want this person to collect
Does the individual provide their own tools & equipment ?
No
Can the individual send another person to do the work?
Technically, yes
http://www.hmrc.gov.uk/employment-status/
Based on the HMRC tests I think the person would be considered an employee.
(a) The employer choosing the place of work
(b) The employee choosing the place of work
If you tell her where she has to be that would suggest employee. If she can choose where the work is carried out (e.g. like an accountant, Consultant etc) that would lean towards self employed.
fesuvious said:
And this is the question.
From my perspective I personally set aside £10k for this per year.
If I create an agreement whereby the person that takes on the role invoices me for what they have done, then why can I not just pay them, and leave them to sort their own tax affairs?
You cannot insist someone you employ becomes self employed for the purpose. From my perspective I personally set aside £10k for this per year.
If I create an agreement whereby the person that takes on the role invoices me for what they have done, then why can I not just pay them, and leave them to sort their own tax affairs?
You may get someone who is willing you may not. You will likely have a wider choice of applicants if you employ them legitimately.
HMRC always says that whether a person is deemed to be "employed" or "self employed" is a matter of "fact" - not of "choice".
Many, many domestics who are used by families (part time OR full time) are deemed to be employees and therefore the family has to register as an employer for PAYE purposes and all the usual rules regarding Minimum Wage and employee rights will also apply.
Anyone taking on someone to work in their home needs to be completely up to speed on what their obligations are.
Many, many domestics who are used by families (part time OR full time) are deemed to be employees and therefore the family has to register as an employer for PAYE purposes and all the usual rules regarding Minimum Wage and employee rights will also apply.
Anyone taking on someone to work in their home needs to be completely up to speed on what their obligations are.
shirt said:
can't you just get someone via an agency, hence becoming a customer rather than an employer?
Yes - you can use an agency. If that is the case, you will be invoiced by the agency as a customer of the agency and you then pay the agency - not the worker. The agency will pay the individual you have used - almost definitely as an "employee" of the agency.Countdown said:
Just to add - the place of work question is to differentiate between
(a) The employer choosing the place of work
(b) The employee choosing the place of work
If you tell her where she has to be that would suggest employee. If she can choose where the work is carried out (e.g. like an accountant, Consultant etc) that would lean towards self employed.
If i ask a self employed gardener to do my garden he can;t exactly roll it up and take away to do can he ?(a) The employer choosing the place of work
(b) The employee choosing the place of work
If you tell her where she has to be that would suggest employee. If she can choose where the work is carried out (e.g. like an accountant, Consultant etc) that would lean towards self employed.
If i ask a self employed joiner to build me a fence , while it;s up to him where he makes the panels / cuts the wood to length he;s going to have to put the posts in where i tell him to and put the panels/ rails on those posts ...
it;s not as simple as the suggestion of if you tell the worker where and when the service has to be delivered they must be an employee ...
Whether a person is employed or self-employed depends on the REALTIONSHIP with the people he works for.
The place of work is only ONE of the many factors that need to be considered when deciding whether a person is one or the other.
I really, really hate the expression "self employed" as it is oxymoronic in its meaning. I much prefer the more correct expression "trading on one's own account" which is the wording that any court of law will rely on when determining an individual's status.
There are literally hundreds of cases (some tax, some employment law, some financial) going back over a century concerning disputes as to whether a person was an employee or were "trading on their own account". It is from this large body of cases that the Revenue's "Badges of Trade" tests came about.
There will be cases where individuals carrying out work for households will be bona fide "self employed". There will also be cases where individuals carrying out work for families will be genuine employees. It is important that all parties involved recognise which is the correct situation given the circumstances of the engagement.
But just deciding that a person is "self employed" because it suits one or both parties is not good enough.
The place of work is only ONE of the many factors that need to be considered when deciding whether a person is one or the other.
I really, really hate the expression "self employed" as it is oxymoronic in its meaning. I much prefer the more correct expression "trading on one's own account" which is the wording that any court of law will rely on when determining an individual's status.
There are literally hundreds of cases (some tax, some employment law, some financial) going back over a century concerning disputes as to whether a person was an employee or were "trading on their own account". It is from this large body of cases that the Revenue's "Badges of Trade" tests came about.
There will be cases where individuals carrying out work for households will be bona fide "self employed". There will also be cases where individuals carrying out work for families will be genuine employees. It is important that all parties involved recognise which is the correct situation given the circumstances of the engagement.
But just deciding that a person is "self employed" because it suits one or both parties is not good enough.
mph1977 said:
If i ask a self employed gardener to do my garden he can;t exactly roll it up and take away to do can he ?
If i ask a self employed joiner to build me a fence , while it;s up to him where he makes the panels / cuts the wood to length he;s going to have to put the posts in where i tell him to and put the panels/ rails on those posts ...
it;s not as simple as the suggestion of if you tell the worker where and when the service has to be delivered they must be an employee ...
You're right. Because (as I said above ) the decision as to whether a person is employed or SE is not dependent on just ONE of the HMRC tests. You have to look at them all in balance.If i ask a self employed joiner to build me a fence , while it;s up to him where he makes the panels / cuts the wood to length he;s going to have to put the posts in where i tell him to and put the panels/ rails on those posts ...
it;s not as simple as the suggestion of if you tell the worker where and when the service has to be delivered they must be an employee ...
For example - is your gardener expected to work between specified hours ? Can he send a deputy? Does your joiner do the same type of work every week? Are they paid per hour or dependent on the amount of work done?
I appreciate what eric is saying but I think that perhaps as he is a well regarded accountant he will over analyse things as does every professional.
Eg a dentist tells you to wear a gum shield and floss every night whilst cleaning your teeth ten times a day. A financial adviser may analyse your pension to the nth degree but to most people its just a pension.
the reality is most cleaners or domestic help people are self employed as are gardeners. She gets no holiday pay or sick pay, you wont performance manage her or discipline her if she is late, she may work for others etc.
Most people don't think twice about it.
You can of course employ her, set up a pension for her, a contract and pay her holiday pay, sick pay and maternity pay and possibly buy her life insurance too but most dont.
http://www.hmrc.gov.uk/payerti/employee-starting/s...
Eg a dentist tells you to wear a gum shield and floss every night whilst cleaning your teeth ten times a day. A financial adviser may analyse your pension to the nth degree but to most people its just a pension.
the reality is most cleaners or domestic help people are self employed as are gardeners. She gets no holiday pay or sick pay, you wont performance manage her or discipline her if she is late, she may work for others etc.
Most people don't think twice about it.
You can of course employ her, set up a pension for her, a contract and pay her holiday pay, sick pay and maternity pay and possibly buy her life insurance too but most dont.
http://www.hmrc.gov.uk/payerti/employee-starting/s...
Edited by jonah35 on Saturday 23 August 21:19
Eric Mc said:
HMRC always says that whether a person is deemed to be "employed" or "self employed" is a matter of "fact" - not of "choice".
Many, many domestics who are used by families (part time OR full time) are deemed to be employees and therefore the family has to register as an employer for PAYE purposes and all the usual rules regarding Minimum Wage and employee rights will also apply.
Anyone taking on someone to work in their home needs to be completely up to speed on what their obligations are.
Something to be said for slavery these days, eh?Many, many domestics who are used by families (part time OR full time) are deemed to be employees and therefore the family has to register as an employer for PAYE purposes and all the usual rules regarding Minimum Wage and employee rights will also apply.
Anyone taking on someone to work in their home needs to be completely up to speed on what their obligations are.
jonah35 said:
<snip> you wont performance manage her or discipline her if she is late, she may work for others etc.<snip>
Most people don't think twice about it.
I'd be surprised if OP or OP's wife didn't have sharp words with her if she was late or if she didn't perform to their satisfaction. (performance management doesn't need to entail formal annual performance reviews, most of it is "on the job").Most people don't think twice about it.
And just because she's working for others doesn't mean she isn't an employee. It's quite possible to have 2,3, or more jobs where you are an "Employee".
I agree that most people don't think about it and would probably just pay the employee cash in hand. In that case make sure you keep her happy and she doesn't have a reason to go blabbing to HMRC
.Chances are you'd get away with it, but if it was looked into I can't see how you could possibly sell this as being a legitimate self employed thing. It doesn't pass the test at all does it? You're choosing the hours and where she works. And are you going to be happy if some big fat bloke turns up one day and says your domestic help has a hangover so I'm going to be doing it today?
Didn't think so
Didn't think so
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