If you work as a personal assistant or carer paid through someone's Direct Payments budget, there's a more important question to answer before MTD even comes into it: are you actually self-employed at all? Advice organisations have found that many PAs described as self-employed genuinely aren't, and getting this wrong carries real consequences for both you and the person you support.
This is the single most important question in this guide, and it comes before any discussion of MTD. Advice and rights organisations working in this sector have consistently found that most personal assistants are unlikely to be genuinely self-employed once the usual tests are applied, because the person they support typically controls their hours, their day-to-day tasks, and how the work gets done, all signs that point towards employment rather than self-employment.
If HMRC later decides a PA should have been treated as an employee, the person who engaged them, often a disabled or elderly individual managing their own care, can become liable for backdated PAYE tax and National Insurance, as if they had been an employer throughout, plus potential penalties. This is exactly why some councils now require proof of genuine self-employment status before releasing Direct Payments funding for this kind of arrangement, and why getting the status right protects everyone involved.
Where a PA does meet the tests, perhaps supporting several different people, setting their own hours across clients, and able to send a substitute, MTD applies in the ordinary way. If you support more than one person, all of that income is normally one self-employment business, combined into a single gross figure when checking against the MTD threshold.
Some local authorities explicitly prohibit cash payments for Direct Payments arrangements, requiring traceable bank transfers instead, regardless of employment status. These rules vary by council, so it's worth checking your specific local authority's policy rather than assuming what applied to a previous arrangement still applies now.
Software links are affiliate, help fund CheckMyMTD. Recommendations based on ease of use for self-employed income tracking.
Often not, even if that's how the arrangement is described. Advice groups have found that most personal assistants are unlikely to be genuinely self-employed once the usual employment status tests are applied, because the person you support typically controls your hours, tasks and working methods closely, which points towards employment.
The disabled or elderly person who engaged you could become liable for backdated PAYE tax and National Insurance, plus penalties, as if they had been your employer all along. This is why councils increasingly require proof of genuine self-employment status before releasing Direct Payments funding for this arrangement.
Yes. If you support more than one person as a genuinely self-employed PA or carer, all of that income is normally one self-employment business, and it's combined into a single gross figure when checking against the MTD threshold.
Some councils explicitly prohibit cash payments for Direct Payments arrangements and require traceable bank payments instead, regardless of your employment status. Check your specific local authority's rules, since this varies by council.
You can use HMRC's Check Employment Status for Tax (CEST) tool together with the person you support, and keep a copy of the outcome and the answers given. Having your own public liability insurance and the ability to send a substitute also support a genuine self-employment position.