HMRC’s advice for businesses using Casual Labour can be confusing
In some weeks not a day goes before the question of how to pay casual labour arises. Today was no exception and the advice on HMRC’s website and the articles published elsewhere can be confusing.
HMRC’s website informs you that you’re exempt from PAYE if none of your employees is paid £113* or more a week (including tips, bonuses, statutory pay), gets expenses and benefits, has another job or gets a pension. However, you must keep a record of the payroll payments. So, if just one of these criteria is failed by any employee at any time, then a PAYE scheme should be put in place.
What if the people I employ change regularly?
When trades experience changing personnel on a regular basis, it makes sense to get the payroll procedures right from the beginning. After all, it defies the odds that one casual labourer after another always meet all the criteria above. If you’re unlucky enough to have HMRC take a peek at your business then don’t expect them to overlook the odds too! So, in these circumstances the employer should set up a payroll scheme and then treat all staff, be it casual, seasonal or temporary, in the same way as higher paid or permanent employees. This means completing HMRC’s Starter Form or obtaining a P45 relating to an employee’s previous employment, and ensuring that RTI submissions are sent to HMRC.
We just have someone who helps out now and again
I have come across smaller employers with long term ‘helpers’ whose circumstances are well known to the employer and who are often paid cash, consistently meeting all the criteria above. In those cases assuming no other employees fail the criteria then a record of payments made needs to be kept but the payroll scheme can be avoided, together with the obvious time and expense commitments that necessarily accompany it.
Employers with an existing payroll scheme
Employers with an existing payroll scheme, who subsequently take on additional low-paid casual staff, often read the guidance considering the new casual employee in isolation, overlooking the words ‘if none of your employees’. So, it’s important to recognise that payments for casual labour need to be included in your payroll returns if you have to process payroll and make returns for other employees.
Where should I turn for help?
Asking a professional firm of Accounting Technicians or a Payroll Bureau if often the best way forward for what is becoming an increasingly complex area for many employees. When you factor in the cost of training staff internally, staff wages, and payroll software, the outsourcing option is surprisingly cost-effective. Don’t hesitate to contact us.
*Based on the 2017-18 tax year