Employing a personal assistant query

[tss502]

Hi all,

this is a slightly specialist one - not sure if anyone will be able to help.

We are in the process of setting up an employment contract for a personal assistant for my OH. We are covering most of the costs through Direct Payments, but have agreed to top up the hourly rate out of our own funds, as the level being paid by Social Services was so low that we couldn't recruit anyone. There is a third party agency in our area who set up managed bank accounts and effectively act as payroll on our behalf. They've suggested that as the top up payment will be a private arrangement between ourselves and the PA, that we should just set up a direct debit to her bank account and pay this element directly rather than via themselves. I'm fine with that in principal but I wonder about what it means for the PA in terms of national insurance, tax and pension purposes? would they be expected to declare this income separately via self-assessment for tax, for example?

 

[jugglingmum]

I personally think this money needs to be payrolled, it seems very odd to me that the agency has suggested this, and HMRC could come after you for both the tax and NI at some later date, in my experience they normally levy a 20% penalty as well if you are caught.

The money is part of the PA's earnings, they are an employee, and so you are liable for employee and employer NI.It is one employment - even if you pay some and SS pay some.

I suggest you go back to the agency and ask them to deal with it correctly.

The agency are also leaving themselves open to HMRC accusing them of tax avoidance.

 

[tss502]

I agree that it seems very dodgy! Will follow this up with them again.