During the months of September and October, farming businesses may be employing a number of short-term casual workers to assist with the annual harvest. The specific needs of the farming and agricultural sector have been recognised by HMRC and businesses can benefit from concessions when declaring payments for short-term workers.
The concessions allow for tax to be non-deductible from an employee’s pay in certain situations. HMRC has provided helpful guidance for farming businesses about when tax should and should not be deducted from a harvest worker’s pay.
Here is what businesses need to know.
When an employer does not need to deduct tax
Tax does not need to be deducted from a harvest worker when all of the below apply:
- They are employed for one day or less
- They are paid off at the end of that period
- They have no contract for further employment
Or, if all of the following apply:
- They work for the business for two weeks or less
- They haven’t worked for the business since 6 April and have been paid above the PAYE threshold without PAYE being applied
Or, if all of the following apply:
- They work on a daily paid casual basis, such as one or two days a week
- The number of days they work is not expected to exceed 14 days in total in any tax year
When an employer needs to deduct tax
If any of the below apply for the casual or part-time worker, then the farming business will need to deduct tax and National Insurance through PAYE as per the normal procedures:
- They are working for the business for more than two weeks
- They are taking on jobs other than harvesting
- They are a family member
When to deduct National Insurance
National Insurance contributions should be deducted when earnings exceed the secondary threshold for employers (£175 per week*) and the primary threshold for employees (£242 per week*), and should be applied when casual harvest workers:
- Have no contract of employment
- Are engaged on an irregular basis
- Are working outdoors harvesting perishable crops
- Are paid at the end of each job, such as at the end of the day
The GOV.UK website has an easy-to-follow guide about National Insurance contributions for casual harvest workers.
Employee records must be kept
A record of each worker paid by a business must be kept, even if the business does not have to run a payroll because tax and National Insurance contributions do not have to be paid. The records must include:
- Name
- Date of birth
- Gender
- National Insurance number
- Address
- How much the employee is paid
It is general practice to include the above employee information on your payroll, then report it to HMRC on or before the worker’s first pay day. For casual harvest workers, this is not always possible as they may be paid on the day for the work they have completed on that particular day, so businesses are permitted to report these payments within seven days of the payment being made – a late reporting reason code must be included. A monthly penalty of between £100 and £400 can apply if an employer fails to submit the necessary information to HMRC.
Other regulatory factors to consider
- Check that the employee has the right to work in the UK. You can easily do this on the GOV.UK website – a copy of original documentation must be retained on file.
- Compliance with National Minimum Wage legislation must be adhered to.
We understand that the tax requirement rules around employing short-term harvest workers can be complicated, so it is important to ask for professional guidance. We are happy to provide advice – please get in touch.
* Figures are correct as of September 2022.
