For those of you interested in Direct Payments and Individual Budgets you may be interested in a new research report we have published. You can download a copy from here:

http://www.litrg.org.uk/news/latest.cfm?id=489

Hope it is helpful

Im a bit confused here (whats new...?)

I have a client who receives direct payments formt he local council for being a carer of mother in law..

Took some time to work out what this payment was, as she receives a "wage slip" but this does not indicate the employer..

Is your paper saying that the client should be making contributions to tax / NI from the DP..? And that the person who she cares for - the mother in law is the 'employer' in these circumstances..

I read it that your clients Mother-in-Law is the employer and should therefore be deducting tax and NIC from the wage she pays your client.

This is how i understood it worked in any case - however as the information states clients are hardly ever made aware of this fact.

Oh dear, she needs to contact the Tax Office then, I presume...?

Probably a good place to start. Don't know much about direct payments to be honest.

I assume you mean the 'mother-in-law' receives the DP and then employs someone to care of her. If this is the case then the DP recepient takes on the legal responsibilities of an employer - tax, NI, health and safety, holidays, right to a contract etc. I would suggest initially contacting the DP team in the local authority adult services. In most local authorites there is a team that is responsible for administering DP. They will have set-up and be momitoring the DP. They would have normally explained what the recepient needs to do to conform with empoyment law etc.

Jim is right.

The mother-in-law is the employer and daughter-in-law the employee.

The full panoply of employment and tax law falls upon the DP recipient. Our report was just alerting people to what that entails as it is far from straightforward.

The support from Councils is infinitely variable; some in-house; some outsourced; some non-existent.

We are wanting to simplify the system and get better information and support to DP "accidental employers". The penalties for getting the tax status of people you employ wrong can be very high.