Are Your PAs Employed PAYE? Important budget changes you need to know about...

The recent October Budget brought forward significant changes that may pose financial challenges for individuals who rely on government care funding to employ Personal Care Assistants (PAs) via PAYE. These updates will need careful consideration for those managing their own care teams through direct payments or personal budgets. Here’s a breakdown of these budget changes and their potential impact.

Key Budget Changes and Their Impact

1.     Increase in Employers’ National Insurance Contributions (NICs) A rise in Employers’ NICs is set to increase the overall employment costs for those hiring PAs. For individuals already managing tight care budgets, this added expense could mean fewer funds for direct care and essential support services.

2.     Changes to Statutory Sick Pay (SSP) The adjustment to SSP—now payable from the first day of illness rather than the third—aims to offer more immediate financial support for workers but adds pressure on employers, including individuals employing PAs through government-funded care budgets. This change requires employers to start covering sick pay sooner, increasing costs and creating an additional financial burden.

The implications are even greater for those who rely on essential, round-the-clock support. If a PA cannot work due to illness, it’s crucial to bring in a replacement to maintain continuity of care. This means that employers may find themselves paying two wages simultaneously—SSP for the sick PA and the wages for the temporary replacement.

3.     Minimum Wage Increase The increase in minimum wage is another change that, while beneficial for PAs, challenges employers reliant on fixed budgets. Those requiring 24-hour live-in care may face tough decisions about reducing hours or adjusting care arrangements due to higher salary costs.

Additional Budget Details Impacting Employers

• Pension Contributions: There were no increases to mandatory employer pension contributions in this budget. The requirement for employers to contribute at least 3% under automatic enrolment remains stable, offering some consistency amid other cost hikes.

• Employment Allowance: No changes were made to the Employment Allowance, which still allows eligible employers to reduce their annual NICs by up to £5,000. This can help mitigate the impact of NIC increases, offering partial financial relief for those employing PAs.

• Energy Costs and Inflation: While measures were introduced to assist larger businesses with rising energy costs, these are less likely to affect individual employers using personal care budgets. However, ongoing high inflation continues to affect living and operational expenses, indirectly pressuring personal care budgets.

Will Care Funding Be Increased?

The key question remains: will the government adjust care funding to match these increased employment costs? Without an increase in care allocations, many individuals could be forced to reduce PA hours, scale back non-essential services, or explore alternative care arrangements that may affect their quality of life. Historically, care funding hasn’t always kept pace with inflation or employment cost increases, raising concern about the sustainability of current care arrangements under new budget constraints.

Steps Employers Can Take Now

To navigate these changes, consider these proactive measures:

• Plan Ahead: Review your care budget to understand how the changes to NICs, SSP, and minimum wage will affect you.

• Seek Guidance: Consult with local authorities or advocacy groups for advice on managing these financial shifts.

• Communicate with PAs: Open discussions can help set expectations and explore solutions collaboratively, ensuring transparency and understanding.

Final Thoughts

The October Budget has confirmed increases to NICs and changes to SSP, along with a rise in the minimum wage, creating a challenging environment for those employing PAs. While pension contributions remain unchanged and the Employment Allowance still offers some support, inflation and economic pressures continue to impact the overall cost of care. It’s essential for employers to plan, advocate for adequate funding adjustments, and stay informed about future policy updates to maintain quality care and support.