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Carers taken care of: your step-by-step guide

Article from The Sunday Times Money Section, published Sunday 7th August 2016. Written by Ruth Emery.


"Paying for help at home presents daunting challenges, from toeing the legal line as an employer to sorting out payroll.

Do you require a carer or need to find one for an elderly relative? Employing someone to help you at home allows you to continue living independently and avoid sky-high care home bills. The average cost of going into residential care with nursing (£36,556 a year) is higher than that of sending a child to boarding school (£30,951).

We recently published a guide to employing a nanny (“Just a spoonful of sugar, sick pay, a pension, liability insurance...”, June 5), and readers asked for similar advice on carers.

Hiring a carer aged 25 or over costs from £7.20 an hour — the national living wage — but there are lots of other expenses to consider, as well as legal and tax issues. Here’s our guide to everything you need to know, from understanding payroll and pensions to checking someone is legally allowed to work in this country. Last month the burger chain Byron was found to have 35 illegal workers, from countries such as Albania, Brazil and Mexico.

How to find a carer Advertisements can be placed in local newspapers and magazines, as well as on websites such as and Ask friends for recommendations. Your local council may have suggestions too.

Many people find using a home care agency a lot less trouble than becoming an employer themselves. The agency will handle payment, tax and insurance, but it will be more expensive and you may not always be sent the same carer. You can find a local agency at

Greg Heath, managing director of the financial adviser Derbyshire Booth, said he usually recommended using an agency because of the convenience. For example, if a carer is ill, the agency has to provide a replacement. However, Heath added: “The benefits of employing your own carer include choosing their qualities and personality, and you can ask them for additional household support, such as ironing or cleaning.”

Checks to carry out If you wish to employ a carer, ask to see their passport — and visa, if relevant — to check they are allowed to work in the UK. Ensure the documents, which must be originals, are valid with the applicant present; check details such as the name and date of birth are consistent, and that photographs show the applicant. The Home Office stipulates that you must record the date you made these right-to-work checks.

Employers can be jailed for up to five years and receive an unlimited fine if they know, or should have known, that they hired an illegal worker.

Make sure your carer has Disclosure and Barring Service (DBS) clearance — a criminal record check — and obtain a copy of this document too.

Payroll and pensions You must register with HM Revenue & Customs as an employer if you are paying the carer more than £112 a week. For more details, visit You must also pay him or her at least the national living wage if they are aged 25 or over, or the national minimum wage if they are younger. For those aged 21-24 this is £6.70 an hour and for 18 to 20-year-olds it is £5.30.

Unless you use a payroll agency, you will need to set up and run your own payroll, which means deducting and paying your employee’s income tax and national insurance contributions (NICs). If the carer is paid £112 or more a week, you will have to operate PAYE, which is HMRC’s system for collecting income tax and national insurance.

If you pay them £156.01 or more a week, you will have to pay employer’s NICs. However, it is possible to get up to £3,000 a year off your NICs bill using the employment allowance. Carers are eligible workers for this tax break, unlike nannies.

Special software is needed for running a payroll — find a free package

Many employers outsource the administration to a payroll agency. One, PAYE for Nannies, has some clients who use it for their carers. Its standard charge for handling tax and administration is £138 a year for monthly pay or £234 for weekly pay.

Bill Hill, director of PAYE for Nannies, said: “We have about 150 clients where the employee’s job title includes ‘carer’. This is definitely a fast-growing area as the burden on small employers of administering a payroll increases year on year.

“All employers of carers can claim the £3,000 allowance to offset their national insurance.”

You may also need to set up and contribute to a pension for your carer. If you pay them £10,000 or more a year — equivalent to £192 a week or more — they must be automatically enrolled into a pension. The minimum contribution is 2% of qualifying earnings, of which at least 1% must be paid by the employer. If you pay the carer less than £10,000 a year but they have other part-time jobs that take their total earnings above this threshold, you do not need to enrol them into a pension.

Companies such as Nest and Now: Pensions provide workplace pension schemes.

Contract and insurance

The carer’s contract should set out the terms agreed, such as work hours, which can be more than 48 hours a week if they agree to opt out of working time regulations, and pay rates. If you have a live-in carer, the contract should include a requirement for them to vacate the property when they leave the job, the law firm Irwin Mitchell said.

Carers may also be eligible for statutory maternity pay, sick pay, paid holiday and redundancy pay. For example, most of those who work a five-day week must receive 28 days’ paid leave a year, including bank holidays.

Don’t forget about insurance. Employer’s liability insurance with minimum cover of £5m must be obtained. Melanie Stancliffe, a partner in Irwin Mitchell’s employment team, pointed out that car insurance is needed if the carer will use the employer’s vehicle.

Help with costs If you or your relative are assessed by your local authority as having care needs, it can give you cash to fund your own arrangements, known as direct payments, rather than providing assistance for you. About 144,000 people in England receive direct payments, according to the charity Skills for Care. Of these, 65,000 choose to spend the money on privately employing carers. The rest use the money to buy equipment or hire carers through an agency.

Remember that if you use direct payments to hire a carer privately, you will be considered an employer and must therefore meet all legal responsibilities as one.

Tenants can be carers too “Can my husband and I let half our house to a couple who will care for us in return for a reduced rent?”

This question was posed by a Money reader who hates the idea of going into a care home. The short answer is yes — but there are many things to consider.

Greg Heath of the financial adviser Derbyshire Booth said: “The terms of the services provided would need to be clearly laid out, as not only will the couple be living in your property but there will be an employee-employer relationship, so all the living wage, holiday, maternity pay and pension rules must be complied with.”

Tenancy agreements, planning rules and tax will also have to be considered."

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The contents of this article​ was written by The Sunday Times in August 2016 and is intended for general information purposes only and shall not be deemed to be, or constitute financial advice. Any information or views should not be relied upon and are independent of Keith Montgomery Associates Ltd.

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