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Direct payments guidance

Tax, National Insurance and pensions

Tax and National Insurance

As an employer by law, you must operate Pay as you Earn (PAYE) on the pay of your employees and pay the correct National Insurance contributions to HM Revenue and Customs.


The Pensions Act 2008 introduced new rules for workplace pensions in the UK. These changes affect every workplace and make sure that every worker will have a chance to save for their retirement.

Since April 2015, every employer has had to give their workers the opportunity to join a workplace pension scheme that meets certain standards. Depending on how old they are and how much they earn, many workers will be automatically enrolled into the scheme. Other workers will be entitled to join the scheme if they want to.

Employer Insurance

This is a legal requirement that covers you if your personal assistant has an accident, as you may be held responsible.  It also gives cover for possible legal and industrial tribunal costs.  There are insurance providers offering special policies for people employing personal assistants. 

The cost for insurance is to be met from your existing Direct Payment. There will be no additional funding available for this. Evidence of appropriate insurance cover must be provided to the council each year.