Thankfully, it is fairly rare for people in their 50s and 60s to need a personal carer. However, those of us who have ageing parents may find ourselves in a situation where hiring a private carer is the best way to ensure that a family member is properly looked after in their own home. It sounds like a straightforward proposition, where the most challenging part is likely to be finding the right person for the job.
Unfortunately, the financial aspect of the arrangement is rather more complex, and you could find yourself in trouble with the taxman, according to a recent report from myageingparent.com published in Mature Times. Deborah Stone, MD of the website, which is considered a leading source of information for anyone with older relatives, explained that one of the benefits of home care is that it “allows you to retain your independence and stay within your social circle and support network.” But, she warned: “It’s not something you should do without checking out your responsibilities first.”
Apparently, many people are under the misconception that a private carer is a self-employed person, whereas, as Deborah Stone explains, they should almost always be treated as having employee status, which means you could find yourself liable for sick pay, maternity leave, holiday pay, redundancy, and soon employers of carers will also be responsible for pensions as well.
Ms Stone states that the legal obligations of anyone hiring a permanent or live-in carer are the same as a business hiring an employee. You must account for the PAYE and National Insurance contributions based on the salary you’re paying them. Failing to follow this correctly could leave you in trouble with HMRC. It’s certainly not something that a frail and vulnerable older person would want to deal with.
In addition,if the family member is in receipt of Direct Payments or Personal Budgets from Social Services, then they also now have employer status. For example, a disabled person in receipt of these payments, who takes on someone to help them with cooking, washing, dressing and so on is now their employer, not Social Services. As Deborah Stone says, this situation actually creates a burden of extra work for people who really need a helping hand.
Confusing HMRC rules for employing carers
It sounds to me like an awful lot of people are likely to be confused by the HMRC rules, which are that “every employer who pays an employee £112 per week or more, has to calculate PAYE and submit the information online at the same time as the employee gets paid.” This is called “Real Time Information” and if you don’t submit it, you get a fine from HMRC. I called a friend who has just returned home after a double leg amputation. During his convalescence he negotiated a home care package that provides for a carer to come in four times a day. He is in his late 50s and as a former publisher he is pretty tech savvy, but even he finds the “Real Time Information” submission something of a challenge.
And now, there’s another hurdle; contributing to a carer’s pension. Deborah Stone commented that the size threshold at which a business becomes responsible for employee pension contributions has been steadily reducing and by April 2017 it “will embrace all employers with qualifying employees.” In October 2017, employers with staff aged between 22 and state pension age, who earn more than the minimum earnings threshold, must enrol the employee in a qualifying pension scheme.
This is causing considerable concern among families who want to hire a private carer. In response to the deluge of queries about how to cope, myageingparent.com has partnered with Taxing Carers to provide an advice service that sets out the employer obligations in a way that is understandable.
For example, there’s some good news: since April 2015 employers of carers are entitled to an Employment Allowance. This is a deduction of £2,000 (£3,000 from 2016) from the National Insurance paid on behalf of the carer. It is perhaps worth noting that anyone aged 21 and under doesn’t have to pay National Insurance contributions.
There is a host of other information available at myageingparent.com, which has partnered with experts in many different areas to bring you expert advice. It is trying to help families through all the red tape that comes with care for the elderly: thank goodness, because it is certainly more challenging than I ever imagined.