National Insurance and PAYE for domestic cleaners
Domestic cleaners were seen as ‘self-employed’ as they take several jobs, each for a small number of hours for several clients. Householders paid their cleaner cash-in-hand’ and (sometimes) obtained a ‘receipt’ to account for monies paid.
1997 saw a firmer approach by the taxman. Self Assessment makes tax payers responsible for their own tax affairs and liable to fines if they do not comply.
The Revenue aimed to crack down on the ‘black economy’ and ‘cash-in-hand’ payments. A cleaner is not self-employed unless they have registered as such.
Your position as an ‘employer’
You are not liable for employer’s National Insurance (NI) nor are you required to collect employee’s NI. (There is a little known exclusion that only applies to employers of cleaners in private domestic residences. However, the more common exclusion is that the cleaner is not working enough hours to become liable for NI). As you are the cleaner
’s employer, because you are paying their wages, you can be liable for PAYE*.
* There is an exception to this where the cleaner has followed a specific procedure to make themselves officially self-employed. Then they and notyou would be responsible for tax on their earnings. (It’s not enough for a cleaner to tell you they are self-employed and give you a receipt! Unless they are officially self-employed, they are your employee.
The SelClene Agency monitors cleaners’ earnings on a computer system. Careful monitoring of the cleaner’s earnings removes from clients any liability for inaccurate PAYE assessments, as we can demonstrate what the cleaner’s cumulative earnings are across all their clients over any given period.
This effectively protects SelClene clients from any illegitimate or unfair PAYE assessments and for any arrears of PAYE. If ever you are asked any questions by any relevant Authority, refer them directly to the Agency.
It is the policy of SelClene to encourage all cleaners earning over the tax threshold to become officially self-employed. Our aim is to save clients the bother of making deductions and to make the cleaners responsible for their own tax affairs.
Our computer system enables our clients and cleaners to fully comply with Inland Revenue requirements with the minimum of disruption. You are able to continue employing and paying your cleaner by cash or cheque directly according to the hours worked and the work done. However, please follow the instructions below carefully.
Keep your own record of all monies paid to your cleaner
Have your cleaner complete the Worker Earnings Receipt Forms (WERFs).
Keeping a record of the cleaner’s earnings is a statutory requirement. We monitor earnings based on the hours per week cleaners are contracted to work for each client. Occasional absences (holidays, days sick) may arise of which we are unaware. So use the WERF as your own record of all payments made. It is a legal requirement that you keep a record of payments made to your cleaner(s) (e.g. the WERF) for up to six years after they stopped working for you.
Notify us of any change in the number of hours worked or in their pay. We need accurate information on the hours your cleaner works and the amount of pay per hour they earn from you. (If your cleaner is clocking in an out under our Timeline service, please ensure that the cleaner consistently uses the service to accurately log their times. This ensures you only pay for the hours your cleaner has worked. Some Agencies may not offer this additional service; check with your local Agent.)
We need to be informed by you of any changes. Pay monitoring is a service SelClene makes available to its clients but it is in your interests to notify us of any changes in pay rates or hours worked.
How do I find out if PAYE deductions are required?
1 If a cleaner earns under the current tax threshold set in the latest Budget and SelClene is their main employment, no other deductions need to be made. 97% of our cleaners earn under this threshold.
2 If a cleaner earns more than this limit, and/or they have other employment, they will be notified they are over the threshold and encouraged to go
officially self-employed and to appoint an independent accountant to handle their affairs.
3 If you wish to know your cleaner’s cumulative earnings across all their employments, and check if they have gone self-employed if they are over the threshold, contact the Agency.
The main function of SelClene’s computer program is to set up a workable system that enables clients and cleaners to comply with the law.
By monitoring a cleaner’s combined earnings it removes the majority of SelClene clients from any liability for PAYE.
Without this monitoring system, clients would be liable for PAYE levied at the current emergency rate.
The monitoring system works by proving the combined earnings of the majority of cleaners are under the threshold. Clients need to complete the WERFs and to advise the Agency of any changes in hours or pay relatingto their cleaner.
Where possible, cleaners earning over the threshold are made officially self-employed.
As long as they remain within SelClene, clients can continue to pay their cleaner direct, secure in the knowledge that they as clients and their cleaner are complying with the legislative requirements.