Independent Living Association (ILA), Worthing, West Sussex © Copyright 2011

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Tax & national insurance information for new PAs - fact sheet 4.0

 

 

Tax and national insurance information for new PAs  

 

You should give a copy of this information to your PA when they start work with you. It outlines details of income tax and national insurance requirements. Please note this information is not applicable to self-employed PAs.

More information on all topics covered here can be found at: www.hmrc.gov.uk.  

Rules on income tax and national insurance for PAs  

Personal assistant employment follows the same rules on income tax and national insurance as all other employment. Income tax is payable on the income from this job if your wages exceed the personal allowance (see below). National insurance is payable on the income from this job if your wages exceed the primary threshold (see below).

If you do more than one job, it is the total income that counts for tax – if the total is over the threshold then you are eligible to pay tax.

It is your employer’s responsibility to deduct tax and national insurance from your wages. If you do not provide adequate information to your employer they will have to tax the whole of your PA earnings at basic rate (20%). You can reclaim any excess tax paid from HMRC, but to avoid overpaying in the first place, it is in your interests to provide adequate information to your employer as quickly as possible.

 

 You can earn a certain amount each year (your personal allowance) without paying any Income Tax. In the 2011 – 2012 tax year the personal allowance is £7475.

 

 You can earn up to £139 a week (in the 2011 - 2012 tax year) before you pay National Insurance. This is known as the 'primary threshold'. However, as long as you earn more than the lower earnings limit (£102 a week in the 2011 - 2012 tax year) you can still build up your entitlement to a State Pension and certain other benefits.

 

What to do if you have a P45  

You will receive a P45 from your employer when you stop working for them. A P45 is a record of your pay and the tax that's been deducted from it during the tax year. It shows:

 

 your tax code and PAYE reference number

 

 your National Insurance number

 

 your leaving date

 

 your earnings in the tax year

 

 how much Income Tax and National Insurance contributions were deducted from your earnings

 

When you start a new job you should give Parts 2 and 3 to your new employer. You should