Who pays what taxes when you hire a housekeeper? Different rules apply depending on the way you employ a housekeeper. Here's what you should know before hiring or being hired... Click To TweetWho needs to know about the tax rules?
When you hire a housekeeper, make sure you follow the correct tax rules. Failing to follow the local tax rules could land you and your housekeeper in trouble. Employers and employees should each know what taxes must be paid and who is responsible for paying or deducting tax contributions.
Here are some pointers to ensure you follow the correct tax rules when employing a housekeeper.
Depending on their employment circumstances, you may need to treat your housekeeper like any other employee – paying their Income Taxes, National Insurance and any other deductions through a payroll service, before you pay them their wages.
As their employer, you also need to ensure they have the correct rights to work in the UK. Currently any EU citizen can work in the UK and anyone who is a citizen of a country outside of the EU should have a working permit or a visa. You should consider whether your housekeeper needs a working permit to be able to legally work in the country which they are working in.
You would be considered the “employer” of a housekeeper if you hire them, either directly or through your company, and they are not self-employed or paid through an agency.
Employed
If you employ your housekeeper directly, you are responsible for ensuring deductions are made correctly before paying their wages. You should:
- Ensure that they have the right to work in the UK
- Provide them with a contract
- Pay the housekeeper at least 20 days holiday plus 8 bank holidays each year (based on full-time, permanent employment). If the employee is part-time then holiday can be worked out on a pro-rata basis
- Pay the housekeeper Statutory Sick Pay (SSP) and Maternity Pay
- Provide the housekeeper with payslips so that they can see exactly how much they have been paid and what has been deducted
- Set up payroll/PAYE (or use a payroll service)
- Deduct and pay the employees Income Tax, National Insurance contributions, as well as any other deductions which should be made.
Self-Employed
If your housekeeper is self-employed you should pay them their gross salary. And not deduct any amount for Income Tax, National Insurance or other deductions.
They are responsible for their own taxes. And they should submit a tax return to the Her Majesty’s Revenue & Customs (HMRC) each year.
If your housekeeper is self-employed you do not have to pay them holiday. Neither do you pay Statuary Sick Pay (SSP) or Maternity Pay.
Fixed-term Contracts
If you have a housekeeper on a fixed-term contract you can either employ them directly or they can be self-employed. The rules above still apply.
You might have a contract with your housekeeper for less than a year. If this is the case, you may pay them for less than the usual 20 days holiday and 8 bank holidays. You should work out their holiday pay on a pro-rata basis, which means they earn their holiday as they work.
Agencies
If your housekeeper is paid through an agency. Then you don’t have to worry about their Income Tax or National Insurance contributions. You should simply pay the agency. Then the agency is responsible for deducting and paying the housekeeper’s Income Tax or National Insurance contributions.
Income Tax and National Insurance Contributions
If you employ your housekeeper directly you must pay HMRC the Income Tax and National Insurance contributions. This you will deduct from your housekeeper’s gross pay. You may also have to make other deductions from your employee’s gross pay, including:
- Student loan repayments
- Pension contributions
- Payroll giving (the employee can donate to charity before their tax is deducted)
- Child maintenance (if requested by the Child Maintenance Service)
At Polo & Tweed is a recruitment agency. Not an employment agency.
We can help you find a suitable housekeeper to hire directly or as a self-employed candidate. To discuss your options give us a call on 0203 858 0233 or contact us here.