Understanding the financial treatment of casual harvest workers

Chris Campbell

Chris Campbell

Tax Senior Manager

20 October 2017

    If you are a farming employer, you’ve very likely experienced challenges in the financial treatment of ‘casual’ employees, an area of particular relevance at this time of the year when many short term workers are employed to assist on farms during the harvest season.  

    As an employer, most Farmers will be aware of the concept of Real Time Information, which requires details of all payments made to employees to be sent to HM Revenue & Customs (HMRC) on or before the date of payment to the employee. This is normally sent electronically by a Full Payment Submission on each payroll run, along with other information such as hours worked and pay frequency.

    Special concessions

    Farm businesses can benefit from a special concession available for casual workers who are not family members and work outdoors harvesting perishable crops, or as casual beaters for a shoot.  This is a very specific concession which recognises the particular needs of the farming sector and the practicalities of declaring payments for what, in some cases, could be a significant number of short term workers. However, if the farming concession does not apply, then the bottom line is that the worker needs to go on the payroll and the Real Time Information submissions need to be made as normal.

    Under the concession for farming businesses, it is unnecessary to deduct Income Tax under Pay As You Earn (PAYE) from a harvest casual or casual beater in either of two potential scenarios. One is where the worker is employed for one day or less (provided they are paid off afterwards and have no contract for further employment with the business); and the other is where the worker is employed for less than two weeks, has not worked for the business since the start of the tax year and is paid at a rate of pay below the PAYE threshold (currently £221 per week).

    National Insurance need not be deducted if the worker earns below the Primary Threshold for employees and the Secondary Threshold for employers (both currently £157 per week).

    It is important to note that, even if no deductions are required, the farming business must still retain a record of the payments made including the worker’s full name, address, date of birth, National Insurance number, gender and amounts paid.   This will need to be held on file in case of HM Revenue & Customs enquiry.

    Regardless of whether the tax concession applies to your workers, other regulatory factors such as ensuring that the worker is entitled to work in the UK, and compliance with minimum wage legislation must be adhered to.  When checking if an employee has the right to work in the UK, the employer should examine the original documentation and retain a copy on file, as the penalty charged for employing workers not entitled to work in the UK can be significant, with potential adverse effects on the cashflow of your business.

    The rules around the tax requirements for short term workers are complex, and it is important to seek professional advice to avoid unnecessary penalties and fines for non-compliance. Our agricultural and farming experts are here to help, and should you need further advice, please visit www.jcca.co.uk.