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As the Government moves forward with plans to extend the system of direct payments, LITRG urges the various bodies involved to work together.

What are Direct Payments?

The direct payments system facilitates independent living by allowing individuals – such as elderly and disabled people – to organise and pay for their own care from a personal budget.  But this means that they become ‘employers’ of their carers in the eyes of HMRC and are required to operate a payroll, among other obligations. 

There are many Government departments with responsibility for different parts of the policy on direct payments and we have previously called for them to work together in addressing the issues.

New Developments

The Department of Health now proposes to enable Primary Care Trusts (PCTs) to administer direct payments. 

In our response to their proposals, we stress that:

• PCTs will need not only to make decisions on giving a direct payment, but also give information and support to the individual on how to manage it. 
• Guidance and training from the Department of Health working in conjunction with others (including HMRC on tax issues) is therefore crucial.
• Lessons should be learned from existing direct payments experience to ensure that there is consistency of treatment across the numerous PCTs.  To achieve that end, we think it best that certain requirements are set out in law and not left to guidance.
• If support for operating a payroll and dealing with employer issues is not offered free to the direct payment recipient, the cost of purchasing those services needs to be taken into account in calculating their budget. 

Whilst the consultation document does indicate that the Department of Health is working with other interested parties, we will be watching developments carefully as it is vital that HMRC are brought into the picture early on and are proactive in development of the guidance. 

Useful links

LITRG’s 2008 report Independent Living, Direct Payments and the Tax System

LITRG’s earlier article Direct Payments – Even More Joining Up Please

The Department of Health’s consultation document, LITRG’s response  and appendix