Q: If I’m paying a cleaner for four hours a week at the minimum wage, can I just pay them cash in hand without having to take into account tax and NI?
Apr 28 2010
Answered by: Clive Lewis Ask a question
As an employer you have a legal obligation to operate PAYE on the payments you make to your employees if their earnings reach the National Insurance Lower Earnings Limit (LEL). For the tax year 2010-11 this is £97 a week, £421 a month or £5,044 a year. You use the employee's tax code and National Insurance category letter to work out how much Income Tax and NICs to deduct from their pay and how much Employer's Class 1 NICs you owe on their earnings. By the 19th of each month - or by the 22nd if you make electronic payments - HMRC must have received the amounts owed. You may be able to send the amounts due every quarter if your average monthly payments are likely to be less than £1,500.
From what you say the earnings in this case are approximately £24 per week. So, provided the cleaner has no other earnings there will be no requirement to deduce tax and NIC contributions.
If the cleaner has other earnings you should check with HMRC whether you need to operate a payroll scheme and register as an employer with HMRC. Once you have registered, you will be given the option of receiving a New Employer pack which contains the Employer's CD-ROM. This CD-ROM contains electronic calculators as well as all the forms and information you'll need to operate PAYE.
If you employ domestic staff in your home you may be able to operate the Simplified PAYE Deduction Scheme. If you think this may apply to you, read the related HMRC guide before you register. You can register as an employer either online or by calling HMRC’s New Employer Helpline on Tel 0845 60 70 143.
Further information is available on the HMRC website.
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