Paying Employee Tax and NI
All employees must make Tax and NI contributions, including temporary or part time employees. Employers, including domestic employers, legally have to make Tax and NI deductions from their employees' wage and pay this to the government on the employees behalf.
The Basics of How it works?
All employees in the UK are obliged to contribute financially to the state through Pay As You Earn (PAYE).
Both Tax and National Insurance is deducted every time the employee is paid, throughout the year.
The employer is responsible for making those deductions and paying what they have collected to HMRC on your behalf.
The family or families an employee works for are responsible for operating a PAYE scheme for them.
The family deduct the Tax and National Insurance an employee owes from their gross earnings.
The family then pay this to HMRC on the employees behalf.
Check that they are registered under a PAYE scheme.
Keep a record of their payslips every time they are released.
A payslip will show how much Tax and NI a an employee is paying to HMRC, as well as their individual tax code, pension contributions and their net (take home) pay.
Important: Never assume that tax is automatically being paid by an employer, especially if regular pay slips are not being given. Many nannies have fallen foul of this and have experienced difficulties as a result.
The danger of NOT PAYING TAX
It is considered a criminal offence to not pay the correct amount of Tax and National Insurance. If caught, both an employer and an employee could face a series of penalties. These may include:
Repayments of any unpaid Tax and NI to HMRC including interest
Potential fines for lack of payments and also lack of RTI information
Criminal investigation with a risk of prosecution and imprisonment
While being paid 'cash in hand' may seem nice and easy in the short term, it can create long term difficulties for the following;
Statutory rights, including Sick Pay, Maternity Pay and Redundancy
Applying for a mortgage or loan as lenders require proof of earnings. Often the last 6 payslips
Perfect Household Staff Offer the following:
1. Check the employee has the right to work in the UK.
The complete candidate document package will be submitted to you following the placement.
2. Negotiate a gross salary with your employee.
Many Employees want a net salary but we recommend agreeing a gross for numerous reasons.
3. Find out the total cost of employing any staff.
Your total cost will include your employee's gross wage, employer's NI, and possible pension contributions.
4. Ensure that a contract of employment is in place.
Perfect Household Staff will offer you a template as part of our service.
Employing Domestic Staff
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