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Employment Status of the Carer

Here is our take on the tax position:

The rigmarole for deciding whether you are "employed" or "self-employed" can be found at:
DirectGov (Understanding your work status)

Asking questions of your tax office often proves a trap for the unwary. Hours on the phone, no straight answers.
We recommend you just take the typical starting point and opt for Self Employed status.
If income remains below personal allowance (eg. £6,475 May 2010) no one is interested, no tax return required.

Take an example: Say a carer helps someone for 5 hours per week for say £35. That's £1,820 per year, nowhere near the personal allowance.

Once the allowance is exceeded a tax return is required. And its only when earnings get substantially beyond a personal allowance that Self Employed status might be challenged by your tax office.

If your situation is already in need of more focussed tax treatment, ie the client needs to become an employer, then SimpleNeeds may be able to help. We are evaluating a payroll service, where we would take on the responsibily for processing NI and income tax. If you are interested then Contact Us.

As usual with tax affairs, its rarely straightforward.

The best source of information is DirectGov (Public Services Official Website) where you will certainly find plenty to read.