The treatment of casual employees will generally depend on whether or not a P45 is produced by the employee, the length of the employment and the rate of pay, although special treatment applies to certain groups, as outlined below.
The pay of students working during their vacations is usually covered by personal allowances. Where the student, on a course in the UK, works solely for an employer during the vacations, a special procedure may be used. Use of form P38(S) will relieve the employer of the burden of operating PAYE in respect of such casual employees and relieve the student of the need to pay tax. However, it should be noted that this procedure applies only to tax. If the pay exceeds the NIC lower earnings limit, a deductions working sheet must be prepared to record the NIC.
The P38(S) procedure (see above) should not generally be used for students on courses abroad unless they are sponsored by certain organisations, details of which are listed in the Employer’s Further Guide to PAYE and NICs.
By a 1984 agreement between the Revenue and the National Farmers’ Union, farmers have not had to operate PAYE on the pay of casuals whom they did not employ for more than a day, paid off in cash at the end of that day, and had no agreement or expectation to re-engage. In a press release of 29 May 1991, the Revenue announced a modified view of the agreement with the Farmers’ Union: an agreement for further employment exists only where there is a contract (which may be oral) for further employment. So when deciding whether tax should be deducted from a daily casual harvest workers’ pay, farmers no longer need consider whether they expect to offer the worker further employment.
Casual workers in the film, video, TV and radio industries
HMRC have agreed that certain workers in these industries, provided they fall into specific categories, are correctly assessable under Sch. D. The Contributions Agency (now NICO) has also accepted this status for NIC purposes.