The advice given on H.M. Revenue & Customs’ website is quite confusing so let’s try to explain how you should account for casual workers and keep matters simple.
What if the people I employ changes regularly?
When a business employs different workers on a short-term basis it makes sense to get the accounting and tax treatment correct from the outset, especially as this is an area often targeted by the Revenue when they carry out a wages inspection.
You must register your business as an employer with HMRC if any of the following applies to one of your employees: –
- You pay them more than £116 per week (2018-19)
- You pay them expenses or benefits
- They are in receipt of a pension or have another job
If none of your workers is caught by the above, then you can pay them gross but you must still keep adequate records of who you have paid and how much you have paid them and you need to be able to prove that you have checked that each employee does not have another job or in receipt of a pension.
To be safe, you should set up a payroll scheme and treat all workers be they casual, seasonal or temporary in the same way as higher paid or permanent employees. This means completing a PAYE Starter Form or obtaining a Form P45 relating to the employee’s previous employment and ensuring that RTI submissions are sent to HMRC.
Failure to account and tax employees correctly can result in sizeable fines levied by HMRC.
You should make sure that you pay employees at least the living wage and potentially enrol them in a auto enrolment pension scheme.