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PAYE Problems of Casual Workers

HMRC regularly raises questions about casual workers and their payment through the PAYE system. Incorrect handling can result in significant costs, including arrears of PAYE for up to six years, interest, and penalties.

As per HMRC’s definition, a "casual employee" is someone hired for no more than one week and not rehired within the same tax year. If an individual works for longer than one week or is rehired later in the tax year, they are not considered a casual employee, and the PAYE system must be operated.

If casual workers earn below the PAYE threshold, employers only need to maintain records of their name, address, and payments made. However, if their earnings exceed the threshold, PAYE must be applied.

However, even if they are casual workers, if the wages payment exceeds the PAYE threshold, a deductions working sheet needs to be prepared and PAYE applied accordingly. A BR or emergency tax code should be applied.

Please note that there are special rules for farmers and migrant workers.

How We Can Help You

HMRC can be strict in their application of these rules so please ask us for any clarification you require. We can also assist in any disputes with HMRC over casual employees.