Paying au pair and Real Time Information

[MGMidget]

I have just hired a new au pair who will be paid below the National Insurance LEL. With previous au pairs my understanding was that there was no need to register them as an employee with HMRC if their earnings were always below the LEL. However, with Real Time Information coming in April I can't work out if this requirement is changing. Having looked at the HMRC website it looks like all employees apart from students working during the summer or employees working for a week or less would need to be registered as an employee. There was recently an update on the You Gov website to say that an au pair is not an 'employee' but HMRC don't give any information on au pairs so it doesn't seem clear whether they are regarding an au pair as an employee. I'm confused, has anyone worked out whether Real Time Information will apply to au pairs earning below the LEL yet? Also it looks like new employees starting now would need to go onto Real Time Information immediately (i.e. before April). If so, I am wondering whether I can get new au pair to agree to being paid every two weeks instead of every week as the admin could be horrendous! Does anyone have some answers? Mr Anchovy perhaps??? Thank you!

First the easy bit - provided your au pair (and any other employee) has no other job and you pay her less than £107 each week (EVERY week, including any pay for additional hours or bonus etc.) you do not have to register as an employer for PAYE - RTI does not change that.

Next two points about the gov.uk information (not YouGov, they are something entirely different!) - (i) it is wrong; (ii) it doesn't make any difference as far as HMRC are concerned - tax law is not the same as employment law.

Now the complicated bit:

The change with RTI is that previously if you were registered for PAYE and you paid anyone less than £107pw you did not have to report their earnings. With RTI you have to report earnings of everyone that you employ every time you pay anyone, even if they have no other job and earn less than the LEL or they are on a zero hours contract and don't have any earnings that week.

New employers registering for PAYE are being registered on the RTI pilot scheme by default, but you can opt out of this.

HTH

MrAnchovy, thanks for such a comprehensive reply!

I have one other question. How can I safeguard myself against an au pair taking a second job and not telling me? I'm thinking of getting the new au pair to fill in a form P46 and sign something to confirm that she must seek permission from me before accepting any other paid work, also that all pay is gross. I still don't know if that is enough though to protect me if an au pair takes a second job without telling me as might not find out for ages. I am wondering if the best way to protect myself is to register for the RTI even if we don't have to but I am not keen to introduce an administrative burden unnecessarily!

The P46 is confusing too - does an au pair declare if she has had a previous job since April in her home country or only if she's had a previous job in the UK?

"I have one other question. How can I safeguard myself against an au pair taking a second job and not telling me? I'm thinking of getting the new au pair to fill in a form P46 and sign something to confirm that she must seek permission from me before accepting any other paid work, also that all pay is gross. I still don't know if that is enough though to protect me if an au pair takes a second job without telling me as might not find out for ages. I am wondering if the best way to protect myself is to register for the RTI even if we don't have to but I am not keen to introduce an administrative burden unnecessarily!"

That should not affect you in any way, the onus is on the second (and any subsequent) employers. Even if someone at HMRC screws up totally and you decide to go along with it rather than point out the error of their ways the very worst that could happen is that you end up operating PAYE. There is no point opting to operate PAYE now solely to avoid maybe having to operate PAYE in the future!

Just make sure the au pair's contract doesn't say that her pay is net of tax and she understands that.

"The P46 is confusing too - does an au pair declare if she has had a previous job since April in her home country or only if she's had a previous job in the UK?"

That's two other questions, but as neither are about Self Assessment I'll let you off She only needs to declare income that is subject to PAYE in the UK, that is the purpose of the form, but I agree that the wording is not helpful.

Oh its probably worth emphasising to her that she is an employee* and that her earnings with you count towards her tax-free earnings, so if she is ever asked "does she have a job" she must answer yes.

• unless her contract, duties and remuneration are such tha she is not an employee e.g. you do not pay her but give her room and board in exchange for an hour a day of homework supervision, and your contract states that it is not a contract of employment.

Thanks again for such practical advice!

Our contract states the 'pocket money' but doesn't specify 'gross' or 'net' so I hope that's sufficient to be taken as 'gross' and not exposing me. I could ask her to sign a contract amendment to specify it is gross if necessary as I did discuss with her in the interview and by email that we would have to make tax and NI deductions if her pay ever exceeded a certain amount. Our contract does say that we will make any deductions required by law.

Yes, I'll sit down and explain to her so we don't get problems later!

I'd suggest you call it "pay" rather than "pocket money" because that's what it is - you are paying her because she does things for you (which is what makes it employment).

If you state that you will make any deductions required by law then you don't need to say that is is gross because that is what gross means.

Ok, thanks very much.