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When do you have to register as an Employer and how much Tax and NI do you have to pay on behalf of your Employee?? tax year 2012-2013

As mentioned in the previous article once certain conditions are satisfied host family has to register with HRMC as an employer.
 
As an employer you have a legal obligation to operate PAYE on the payments you make to your employees if their earnings reach the National Insurance Lower Earnings Limit (LEL). For the tax year 2012-13 this is £107 a week, £464 a month or £5,564 a year
 
How much National Insurance you have to pay for your employee??
 
Employee can earn up to £146 a week (2012-13) before the employer pay any National Insurance contributions. This is known as the 'primary threshold'.
However, as long as the employee earns more than £107 a week (2012-13) they  can still build up their entitlement to a State Pension and certain other benefits. This is known as the 'lower earnings limit'
 
a) if you pay your employee more than £146 a week and up to £817 a week, you pay 12 per cent of the amount earned between £146 and £817
b) if the employee earns more than £817 a week, you also pay 2 per cent of all your earnings over £817
 
You can find more information on http://www.hmrc.gov.uk/ni/intro/basics.htm
 
Tax-free allowance and Tax liability
 
This tax year (2012-13) the basic Personal Allowance - or tax-free amount - is £8,105. For more details see http://www.hmrc.gov.uk/incometax/basics.htm
 
so if your Mother's Help, or Housekeeper earns up to £155 a week (52 weeks a year) their total yearly income is £8060 so there will not no tax payable on their income.
If the weekly pay is £160 (52 weeks a year) their total yearly earnings is £8320 so only £215 will be taxable.
Income tax basic rate is 20% on earnings £0-£34,370.  You can find more information on http://www.hmrc.gov.uk/rates/it.htm
 
 
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