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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Particular occupations: careworkers

People with disabilities, who receive funds under the Community Care (Direct Payments) Act 1996, the Independent Living Scheme, from a Court award for personal injuries or from private charitable funds etc. need to engage carers to provide the personal care they need.

Careworkers are often engaged through agencies. If so, and the agency legislation applies, then follow the guidance at ESM2001.

If the agency is an introductory agency or no agency is involved, then careworkers can be divided into two categories; those who look after individuals in their (i.e. the careworker’s) own home and those who work in the home of the person being cared for. In most cases, the status of the careworker will be decided on the usual general case law tests.

Care provided in careworker’s home

The guidance on adult carers and adult placement schemes is at BIM52780 onwards.

The guidance on foster parents is at BIM52755.

Under these guidelines, the careworker is usually treated as self-employed with profits chargeable under Case I or Case II of Schedule D and with Class 2/4 NICs liability. It should however be remembered that, unless the Revenue has entered into an agreement with the relevant National Association or representative body in which the profits are chargeable under Case 1 or 2 of Schedule D, these are only general guidelines and that, in appropriate cases, you may need to look at the contractual arrangements that exist between the parties.

Care provided in client’s home

The case law tests normally indicate that a careworker who looks after a client in the client’s home is likely to be an employee. In particular there will often be a significant right of control, for example the carer required to arrive at a pre-arranged time and perform tasks at the request of the client. On occasions the facts may indicate self-employment. For example, it may be the case that a careworker looks after a number of people concurrently and has a business organisation in place. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Operation of PAYE

Where the client is considered to be an employer but he or she might have difficulty in operating a PAYE scheme, consider whether the use of the Simplified Deduction Scheme is appropriate. See the guidance at PAYE73000 onwards and ECH21006. Consider also the possibility of making a local arrangement for a relative or representative of the client to operate PAYE on their behalf. Please note that given the sensitivity of these cases they must be approached tactfully.

From 6 April 2012, HMRC will no longer set up new employers under the Simplified PAYE Deduction. From this date these employers will be set up as standard ‘P’ schemes and will be expected to operate a normal PAYE payroll and file their returns online.

Is the careworker a spouse or close relative?

For NICs purposes, if someone is employed by a close relative in a private dwelling-house in which both the person employed and the employer reside, disregard it unless the employment is for the purpose of any trade or business being carried out in that private dwelling-house by the employer (see ESM4155 and ESM4156).