Tag: payroll

What’s the difference between ‘gross pay’ and ‘net pay’?

Almost all employment industries in the UK discuss salaries in Gross terms; in the nanny industry, however, this hasn’t always been the case. Some nannies are still paid net salaries, but as an employer, if you agree to a Net salary with your nanny you may be in for a shock when faced with how much employing your nanny is really going to cost…  

Almost all employment industries in the UK discuss salaries in Gross terms; in the nanny industry, however, this hasn’t always been the case. Some nannies are still paid net salaries, but as an employer, if you agree to a Net salary with your nanny you may be in for a shock when faced with how much employing your nanny is really going to cost…  

What is Net Pay?

Net Pay is the ‘Take Home Pay’ that your nanny receives after Tax, National Insurance, and Pension deductions (if applicable). This means you will be liable for paying your nanny’s tax, National Insurance, Pension contributions, as well as any student loans and/ or attachment of earnings order (such as previously unpaid council tax or child maintenance) against your employee on top of their salary. This is where many employers find themselves paying a lot more than they had anticipated. 

What is Gross Pay?

Gross Pay includes your nanny’s ‘Take Home Pay’ and your nanny’s tax, National Insurance, and Pension Contributions (if applicable). 

What are the benefits of a Gross salary? 

For Nanny Employers:

  • A Gross salary will help you budget better because it includes tax, National Insurance, and pension contributions right from the start.
  • You won’t be responsible for any unpaid taxes or deductions from the nanny’s previous jobs.
  • It makes things clearer when dealing with HMRC, who usually only talk in Gross terms.

For Nannies:

  • A Gross salary provides job stability, since employers know the full cost upfront.
  • You can take advantage of your tax-free allowance, which usually increases each April.
  • You can compare your salary with other childcare jobs, since most industries use Gross terms.
  • It’s easier to show proof of income for things like mortgages or loans because lenders usually want to see Gross income. 

So how much does employing a nanny really cost?

The Gross salary doesn’t cover all the costs of employing a nanny. What does cover everything is something called the ‘Total Cost of Employment’.

The Total Cost of Employment is the Gross Salary, plus the Employer’s National Insurance Contributions and the Employer’s Pension Contributions (if applicable).

In other words, a Gross salary accounts for your nanny’s tax, National Insurance, and Pension Contributions, but not your own employer contributions. 

How can I work out my Total Cost of Employment?

If you’d like to work out your Total Cost of Employment, you can use Nannytax’s Calculator. Simply enter the Gross or Net salary figure and it will calculate your Total Cost of Employment and some additional helpful breakdowns – easy peasy!

This blog was written by Nannytax, with over 30 years of experience, they are the UK market leader in nanny payroll and nanny employment.

Discover more about Nannytax here. 

Compliance

If you’re new to employing a nanny, you might not be aware of all the things you will be responsible for when you become a nanny employer. Let’s talk about them. 

My responsibilities as a Nanny Employer

If you’re new to employing a nanny, you might not be aware of all the things you will be responsible for when you become a nanny employer. Let’s talk about them. 

Setting up and running payroll 

When you become a nanny employer, you will need to register as an employer with HMRC, once you’ve done this you’ll need to set up and run payroll, providing your nanny with weekly or monthly payslips. 

If you choose to use a nanny payroll service to run payroll for you, such as Nannytax, you will need to verify all the legal documentation is in place so that they can liaise as your payroll agent with HMRC.

Providing a nanny contract

When you find your new nanny, you will need to provide him/her with an employment contract. This will ensure both you and your nanny have a clear understanding of what is expected during the term of employment. 

Reporting to HMRC

You will need to report all of your nanny’s earnings to HMRC if they are earning above the lower earnings limit, which is £120 a week. If your nanny is earning below the lower earnings limit but they have another job or other source of income, their earnings will still need to be reported to HMRC. 

Paying your nanny and Tax & National Insurance liabilities

You’ll need to pay your nanny the net amount stated on their payslip each week or month, this is your nanny’s ‘Take Home Pay’ after Tax and National Insurance deductions. You will be responsible for paying any Tax and National Insurance liabilities to HMRC, these are paid either monthly or quarterly depending on the amount. 

Pensions

If your nanny is eligible, you will need to enrol them into a workplace pension scheme. Once enrolled into the pension scheme, both you and your nanny will contribute to the pension. 

Even if your employee doesn’t want to join or remain in the pension scheme, it is a legal requirement for you to enrol them. Once your nanny is enrolled, he or she may choose to ‘opt out’ if that’s what they wish to do. 

Insurance

All UK employers must be insured. There are specialist nanny employer insurance options available to you, such as Enable Insurance. Holding an insurance policy will ensure you are protected if your nanny becomes injured or ill as a result of working for you.

How can Nannytax help?

This may all seem a bit daunting, but when you sign up to Nannytax, we’ll take care of all of this for you! From your initial Nanny PAYE Scheme set up to producing the final P45 when your nanny leaves, when you join Nannytax you can rest assured your nanny’s payroll is in safe hands.

This blog was written by Nannytax, the award-winning and UK leading nanny payroll experts with 30 years experience. Discover more about Nannytax here.

Statutory Rights

As a nanny employer, there will be a number of Statutory Payments you may need to pay your nanny over the course of their employment. It’s important that you familiarise yourself with each payment and it’s helpful to be aware of the terminology when employing a nanny! 

What is Statutory Pay?

As a nanny employer, there will be a number of Statutory Payments you may need to pay your nanny over the course of their employment. It’s important that you familiarise yourself with each payment and it’s helpful to be aware of the terminology when employing a nanny! 

Statutory Sick pay (SSP) 

As a nanny employer, if your nanny is absent from work due to ill health, you are responsible for administering Statutory Sick Pay. As of 2015 employers are no longer able to reclaim SSP from the government, so you will need to cover your nanny’s sick pay yourself (the 2023-2024 rate for SSP is £109.40). 

Maternity pay 

If your nanny becomes pregnant and goes on maternity leave, as her employer you will be responsible for her Statutory Maternity Pay. The pay rate for the first six weeks of maternity leave is 90% of your nanny’s average weekly earnings, the weekly rate for the following 33 weeks is £172.48 or 90% of your nanny’s average weekly earnings – whichever is lower. Statutory Maternity Pay is funded by the Government but you will need to and are responsible for submitting the maternity pay claim, find out more. 

Holiday pay

Your nanny is entitled to a legal minimum holiday allowance and to holiday pay, which you are responsible for paying. A full-time employee is entitled to a minimum of 28 days of paid annual leave – this includes the 8 UK bank holidays. You can use the Nannytax holiday entitlement calculator to work out how many days or hours of paid holiday your nanny is entitled to: www.nannytax.co.uk/holiday-calculator 

This blog was written by Nannytax, the award-winning and UK leading nanny payroll experts with over 25 years experience. 

Discover more about Nannytax here. 

Statutory Rights

As a nanny employer, there will be a number of Statutory Payments you may need to pay your nanny over the course of their employment. It’s important that you familiarise yourself with each payment and it’s helpful to be aware of the terminology when employing a nanny! 

What is Statutory Pay?

As a nanny employer, there will be a number of Statutory Payments you may need to pay your nanny over the course of their employment. It’s important that you familiarise yourself with each payment and it’s helpful to be aware of the terminology when employing a nanny! 

Statutory Sick pay (SSP) 

As a nanny employer, if your nanny is absent from work due to ill health, you are responsible for administering Statutory Sick Pay. As of 2015 employers are no longer able to reclaim SSP from the government, so you will need to cover your nanny’s sick pay yourself (the 2023-2024 rate for SSP is £109.40). 

Maternity pay 

If your nanny becomes pregnant and goes on maternity leave, as her employer you will be responsible for her Statutory Maternity Pay. The pay rate for the first six weeks of maternity leave is 90% of your nanny’s average weekly earnings, the weekly rate for the following 33 weeks is £172.48 or 90% of your nanny’s average weekly earnings – whichever is lower. Statutory Maternity Pay is funded by the Government but you will need to and are responsible for submitting the maternity pay claim, find out more. 

Holiday pay

Your nanny is entitled to a legal minimum holiday allowance and to holiday pay, which you are responsible for paying. A full-time employee is entitled to a minimum of 28 days of paid annual leave – this includes the 8 UK bank holidays. You can use the Nannytax holiday entitlement calculator to work out how many days or hours of paid holiday your nanny is entitled to: www.nannytax.co.uk/holiday-calculator 

This blog was written by Nannytax, the award-winning and UK leading nanny payroll experts with over 25 years experience. Discover more about Nannytax here. 

Nannytax Salary Index 22/23

How much should I pay my nanny?

Nannytax have recently launched their 22/23 Nanny Salary Index, showcasing the latest nanny salary data across the UK. These salaries are based on Nannytax’s database of nannies and can help you, as a nanny employer, understand roughly how much you should be paying your nanny!

How much should I pay my nanny?

Nannytax have recently launched their 22/23 Nanny Salary Index, showcasing the latest nanny salary data across the UK. These salaries are based on Nannytax’s database of nannies and can help you, as a nanny employer, understand roughly how much you should be paying your nanny!

London Nannies 

Salaries for nannies in London have increased by 8% compared to last year. On average, nannies in London are paid £16.48 per hour, and £42,859 annually. 

Home Counties & Greater London

In the Home Counties & Greater London, nanny salaries have seen a 14% increase to their salaries when compared to last year. The average annual salary for a nanny based in the Home Counties & Greater London is £40,304 and per hour these nannies are paid £15.50.

Rest of UK Nannies

Across the rest of the UK, nannies have seen an 11% increase to their salaries over the last year. These nannies are earning an average of £13.84 per hour, and £35,970 annually. 

Do you want to know the average nanny salary in your specific area? Download Nannytax’s Nanny 22/23 Salary Index.

Please keep in mind that these figures are intended for guidance purposes only. As with any other industry, a nanny’s salary can change depending on their qualifications, skills, and experience.

Nannytax are the UK leading nanny payroll experts with over 25 years experience. Discover more about Nannytax here. 

FURLOUGH 5.0

Our partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.

On Saturday 31st October, the government announced that the Coronavirus Job Retention Scheme (CJRS) will continue until 1 December 2020 with grants covering 80% of wages, while implementation of the Job Support Scheme (JSS) has been delayed. This change has been brought about by the lock down to be introduced from Thursday, 5 November. Many MPs felt that the JSS provided insufficient support during a lock down.

The new national restrictions will apply from 5 November to 2 December 2020, but the financial support for employers applies from 1 November as the furlough scheme operates on full calendar months. October’s wages will still only be reclaimable at 60% of nanny’s standard gross, but as of November 80% will once again be reimbursed.

How much can be reclaimed under CJRS?

The CJRS will continue in force with the same conditions as applied in August 2020. The grant paid to employers will pay for 80% of the employee’s current wages for time not worked, up to £2,500 per month. The employer must pay for all the employer’s NIC and employer’s minimum workplace pension contributions on those wages.

The employer can top-up the employee’s furlough pay at their own expense if they wish to.

Which employees qualify?

Employees who were on the employer’s payroll on 30 October 2020 will qualify to be included in CJRS claim for November; they do not have to have been included in an earlier CJRS claim. The employee must have been paid by the employer, and that pay must have been reported on a RTI return before midnight on 30 October.

Flexi furlough

Flexible furlough will be permitted alongside full-time furlough, so nannies may be brought back part-time to say, set up the premises for the lifting of national restrictions, or to prepare for Brexit.

The same rules for flexible furlough will continue to apply as they have done since 1 July, so the employee may be furloughed for a few days or hours per week. There appears to be no minimum time set for furloughed hours or working hours.

However, each furlough claim must be for a period of at least seven consecutive calendar days.

How to claim?

If you would like to furlough your nanny in November, whether or not you have chosen to do so in the past, just let us know the date from which this will start and whether or not you would like to top their wages up to full pay and we will take care of everything for you.

FURLOUGH 4.0

FURLOUGH 4.0 
Our partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.

Rishi Sunak, the Chancellor of the Exchequer, announced a new raft of support measures connected to the continuing COVID-19 pandemic.  This seems to be a response to the growing lock-down and complaints that the government was not doing enough to assist businesses and their employees.

The Job Support Scheme

When originally announced, the JSS – which will come into effect on 1 November – saw employers paying a third of their employees’ wages for hours not worked and required employees to be working 33% of their normal hours.

This announcement reduces the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible.

Employers will pay their staff normally for hours they work. Then, they’ll be paid two-thirds of their pay for the remaining hours (with the employer covering 5% and the government paying 95%). So people will still see lower take-home pay – we have prepared the table below.

Normal Hours                    JSS Hours                             Take home percentage of contracted hours
20%                                        80%                                        74%
25%                                        75%                                        75%
30%                                        70%                                        76%
33%                                        67%                                        77%
35%                                        65%                                        78%
40%                                        60%                                        80%
45%                                        55%                                        81%
50%                                        50%                                        83%
55%                                        45%                                        85%
60%                                        40%                                        86%
65%                                        35%                                        88%
70%                                        30%                                        90%
75%                                        25%                                        92%
80%                                        20%                                        93%
85%                                        15%                                        95%
90%                                        10%                                        97%
95%                                        5%                                          98%

The maximum payment will be £1541.75 per month. The cap is set above median earnings for employees in August at a reference salary of £3,125 per month. The employer will be reimbursed in arrears for the government contribution. The relevant employee(s) must not be on a redundancy notice.

The JSS is intended to protect viable jobs over next six months after the furlough scheme ends at the end of the month.

All small and medium-sized firms with a UK PAYE scheme and UK bank account are eligible – but large firms are only eligible if their turnover has fallen in the pandemic and can document this. The JSS is open to firms who have not used the earlier CJRS scheme.

That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Employers will continue to be entitled to receive the £1,000 Job Retention Bonus: https://src-time.co.uk/the-job-retention-bonus-explained/ 

Self-Employment Income Support Scheme

As part of the Winter Economy Plan, Rishi Sunak had announced an extension to the Self Employment Income Support Scheme (SEISS).

There was to be a lump sum to cover November to January next year, worth 20 per cent of average monthly profits, capped at £1,875.  There was also to be a second grant for February to April 2021of an unspecified value.

Today’s announcement sets the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.

Business Support Grants

The Chancellor has also announced approved additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas.

These grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.

Local Authorities (LAs) will be able to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by the restrictions on socialising. The funding LAs will receive will be based on the number of hospitalities, hotel, B&B, and leisure businesses in their area.

LAs will receive a funding amount that will be the equivalent of:For properties with a rateable value of £15,000 or under, grants of £934 per month.For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.For properties with a rateable value of £51,000, grants of £2,100 per month.This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month).

Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories. It will be up to Local Authorities to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide.

Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter case support is being provided through business support packages provided to Local Authorities as they move into the alert level.
 
SRC-Time are one of the South East’s leading accountancy firms in advising the self-employed and partnerships in all aspects of their tax affairs and we are able to assist in any issue raised above.

Things to consider when employing a non UK nanny

Our partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.

It is important to make sure you take proper steps to make sure nanny can be employed legally in the UK. If you do not you could face a £20,000 penalty or worst case scenario a 2 year prison sentence!

You must take a photocopy for identity check of a passport, birth certificate or national ID card. We would always recommend you see an original version before taking a copy.

An EEA (European Economic Area), employers must check their right to work documents, take a photocopy, and make sure they are from the EEA country.

For a more detailed guide:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/441957/employers_guide_to_acceptable_right_to_work_documents_v5.pdf

Small Employer Relief

Our partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.

In order to qualify for small employer relief, your liability for national insurance for the last complete tax year needs to be £45,000 or less.

An employer hiring a nanny will often meet the criteria of small employer relief.

This means that for statutory payments such as maternity pay, paternity pay, shared parental pay and adoption pay, you can reclaim 100% of these payments plus an additional 3% to help towards the cost of your employers NI.

It is important that this is noted in the payroll software, so if you ever have statutory payments, they will get deducted off your tax and national insurance liability each quarter.

Employers with a liability of more than £45,000.00 in last complete tax year can only claim back 92% of the above statutory payments.

Benefits in Kind

Our partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.

Benefits in kind are benefits which both Employers and Employees can receive from their employment, which are not included in their salary.

As an employee, you pay tax on company benefits.  The amount of tax you pay, depends on what kind of benefits you get and their value and it is the employer who deducts the amounts from the employee’s gross earnings. However, some company benefits, are tax free.

 Most common benefits in Kind for nannies are listed below:

Private Car Mileage / Fuel Allowance

– Is not a taxable benefit if the employee is using the car during working hours. If they are using the car to get to and from work and outside their normal working hours, then this would be classed as a benefit in kind.  If nanny is using their own car whilst they are at work, up to 0.45p per mile is tax free.  Anything above this amount would be classed as a benefit and kind and will need to be reported to HMRC.

Private Medical Insurance

Subscriptions and Professional Fees

  • Such as paying for nanny’s Ofsted registration, DBS check, Nanny’s Public Liability Insurance

Living Accommodation

If you are providing living accommodation where the nanny has separate living quarters to the employer, this is classed as a benefit in kind, along with any bills and furniture you provide

Beneficial loans – Interest free or low interest

  • Any low –interest or interest free loans above the value of £10,000 are a Benefit in Kind.

Flights – which do not include family holidays if you are taking the nanny with you

Any declarations for Benefits in Kind need to be submitted to HMRC via for P11(D) by 6th July each year.  As an employer, there will be Class 1A National Insurance of 13.8% on the taxable benefit.

For more help and advice on this or any other payroll related matter please contact our recommended partners Payroll for Nannies https://www.payrollfornannies.co.uk/