Self Employed - What Does It Really Mean?Posted: Nov 07, 2019| Author: Alex Facta| 0 Comment
I’m sure we’ve all heard the HMRC slogans: “tax doesn’t have to be taxing”. We aren’t sure if we entirely agree with this, but one thing is for sure, income tax is not as simple as we would like it to be.
Marshall Harber would like to try and clear up some of the confusion surrounding the difference between PAYE earnings and being self employed. It is not uncommon for domestic staff, particularly cleaners and housekeepers, to be registered as self employed. This can make sense particularly for part time cleaners. It’s also appealing for the employers as this means they can avoid the complicated matter of setting up as an employer with HMRC and managing payroll, issuing payslips etc. This is particularly useful if you only require a part time cleaner for a few hours a week or on an ad hoc basis.
There are however considerations that both the employer and employee should be aware of. Generally speaking, as an Employment Agency and due to the nature of how we recruit, it is unlikely that any of Marshall Harber’s candidates would be able to operate with our clients on a self employed basis. We do regularly still receive requests from client’s and candidates to source or recruit for roles that would suit a self employed person. But here’s the issue with that; our clients provide us with a job spec to recruit. Part of this job spec (and actually a requirement of the Conduct Regulations) is to establish the days and hours that the client need the employee to work and as soon as the employer is dictating days and hours, the candidate must be considered as employed and there is actually a legal obligation on the employer to operate PAYE payroll in these circumstances. There is a simple test available online (at the time of writing this blog) where you can easily establish whether someone should genuinely be self employed or not. The online questionnaire can be used by both employers and employees and it can be found on the UK Gov website here: https://www.tax.service.gov.uk/check-employment-status-for-tax/reason-for-using-tool. (Link correct at time of posting)
Of course there are many employers of domestic staff that are not using an agency to recruit and they are completely flexible on the time the candidate works for them and may even book the hours week by week on an ad hoc basis directly with the candidate. They might also be content for the candidate to send someone in to work on their behalf on any days that they are not available. These traits would all result in the candidate being considered self employed, however these are not the conditions and requirements that are usually presented by our clients at Marshall Harber and therefore any candidates (even if they have worked self employed previously) that we present will need to be happy with working on a PAYE basis and to have their hours dictated by a contract.
We felt it important to provide this information to our clients and candidates so that nobody unnecessarily falls foul of any prevailing regulations.
For employers that find the prospect of setting up as an employer and managing payroll daunting (and we totally understand why), there is no longer any need to fear this aspect of employing staff. Marshall Harber have teamed up with a company called Stafftax. Not only do they make payroll easy, but they actually specialise in payroll for domestic household staff and nannies! The packages they offer are very reasonably priced and depending on what level of service you require, they can not only setup your employer account with HMRC and prepare monthly payslips, but they can even process all the payments to your employee and HMRC on your behalf and manage your workplace pension scheme. So there is really nothing you need to be concerned about other than enjoying the benefits of employing a permanent member of domestic household staff. Clients of Marshall Harber are also entitled to a discount on Stafftax services and with the standard package starting from just £276 per year (price correct at time of posting) you will also enjoy an added benefit of having access to Stafftax’s HR & Legal helpline as well as access to their employment contracts and advice on drafting these.
If you would like any more information about this service or you would like to discuss your requirements with one our consultants, please call us on 0207 938 2200. You can also view further information about Stafftax and their services on their website: https://www.stafftax.co.uk/