Guide To Budgeting

A: EXPENSES

When you are writing a Budget for someone who is employing their own PA, you need to consider the following expenses:

1. PA’s Pay Rate
2. On-Costs of Employment
3. Holiday Cover
4. General admin
5. Recruitment
6. Insurance
7. Emergency cover
8. Payroll
9. Training 
10. Other out-of-pocket expenses

1. Personal Assistant Pay Rate

This is the amount per hour that the Employer will pay their Personal Assistant.

This is shown as a gross amount which means that this is the amount that the person will earn before Tax and their National Insurance Contribution is deducted.

This rate differs from employer to employer.  In our experience the average pay rate Monday to Friday is £8 per hour. However it does change depending on the nature of the job and the skill and experience that is required.

Please note that the old Direct Payment rate of (£9.59 per hour and weekend rate £14.53) should not be used as the pay rate. This rate was the amount that the Council would give to Direct Payment recipients and not a pay rate. This rate had to cover a lot more than the PA's Salary.

2. On-Costs of Employment

In addition to National Insurance contributions (NIC) that the PA pays out of their wages, the employer has to pay an Employer's NIC. The payroll service will calculate the exact amount that the employer needs to pay.

This amount is in addition to the salary that the Employer will have to pay so needs to be added into the budget. 

The Employer may also need to pay sick or maternity pay out at some point for their PA. 

These costs have to be paid out by the employer who can then later claim most of it back from the Inland Revenue.

It is recommended that you allow 15% on the whole of the money available for wages to cover employer's NIC, sick pay and maternity pay.

3. Holiday cover

From 1 April 2009 all workers have a statutory right to at least 5.6 weeks’ paid annual leave (that is at least 28 days' paid holiday if you work five days a week).

The PA’s holiday pay will be covered in the budget as you will budget the PA’s salary over a 52 week period.

But when you are calculating the budget you need to consider holiday cover for the weeks that the person’s PA is on leave.

A simple way to do this is to calculate the salary costs over a 57.6 week period. Therefore you are not only covering the cost of the PA’s holiday, but you are covering the cost of the replacement. Or you can take the amount that the PA will earn per week multiply it by 5.6 and divide by 52 to get a weekly cost.

4. General Admin

The client will have administration costs throughout the year. Some Employers ask their PAs to help with admin; others do it themselves or ask family members to help.

Regardless of who does the work, you still need to consider administration costs e.g.:
• paper
• photocopies (e.g. blank timesheets, contracts)
• something to store document in (e.g. in lever arch files and clear plastic hole-punch pockets)
• making copies of recruitment information & application forms
• Postage and telephone costs when communicating with job applicants.

£50 per year should cover administration, i.e. approx £1 per week. This is generally a good estimate for all service users, irrespective of the size of package.

5. Recruitment costs
The admin related costs of recruitment are listed above.
At the moment using the paFinder service is free. But there are other services that charge.
Also if an individual decides to advertise this is an addition cost.

Advertising Costs - examples

Other possible costs related to recruitment include:
• cost of hiring an interview venue (note that the job centre is free)
• transport costs for the client and the potential PA to the interview venue and back again.

Good to allow at least £ 100 per year for Recruitment Costs (£1.92 per week).

6. Insurance costs

Employer's insurance and public liability insurance are required to insure people who work for the client. 

At the moment the Council is giving DP employers an additional £134.50 per year to cover insurance (£2.59 per week). This can be used to purchase the full Fish insurance which gives employer’s full cover. (Basic Insurance is £76.65 - £1.47 per week). 

7. Emergency cover costs

If a PA is sick (and they have been earning enough to pay national insurance contributions), then employers must pay them sick pay.  (This figure is covered in section 2 On-Costs).

The client will need someone else to cover while their PA is off sick.
You need to allow a certain amount for emergency cover.  The amount that you need to budget will depend on the person’s situation.

Things to consider when setting aside money for emergency cover:
1. Has the person got more than one PA who can stand in?
2. Can a family member step in?
3. Do they have a list of PAs that they can call?
4. Is it crucial that they have the same amount of support that they always have?
5. Will they have to use an agency?

When budgeting for an emergency cover a lot depends on how big the package is. At a minimum a person needs a week’s cover but some people need as much as 4 weeks.
If you know that the person will need to use an agency, bear in mind that agency rates are much higher approximately £16 per hour.

8. Payroll costs

There are no payroll costs. Rowan is contracted to provide a payroll service and it is free to the client.

9. Training costs

The individual is legally obliged to keep their PA safe in the work that they do for them.
An individual may choose to train their PAs by instructing them themselves or by sending them on training courses. Training courses may include:
• lifting and handling
• food hygiene
• fire safety
• safety in the home
• first aid

Personal Assistants can access the training that Richmond Social Services provides for free. Current PA Training Available.

Training is expensive. If very specific training is required you should look into what it costs when you are budgeting so that it can be included.

10. Other expenses

Out of pocket expenses should also be considered. Examples of these kinds of expenses are:
• PA transport
• a mobile phone or phone expense for the PA
• PA’s expenses

B: PAYEMENT SCHEDULES

Although for calculating purposes you may want to divide expenses over the year so that you can calculate a cost per week, some expenses need to be paid in full early on. It is important that you tell Finance about these payments so that the client has the money available to them to spend.
 Examples include:
• Insurance,
• Respite Cover,
• Equipment,
• Advertising/Recruitment Costs.

C:  Example Budget

Each budget is different. Below is an example of a simple budget. It is just to give you some idea of what needs to be included and what to consider when you are setting up a budget for employment. It is only going to give you an overview and if we were to help the person to employ a PA we would do a little more detailed work as costs do change according to the type of person the employer employees and the natures of the employment relationship.