Tag: payroll

Grandparents looking after grandchildren – help with state pension

Our recommended partners at www.PayrollForNannies.co.uk  provide payroll advice for parents and have created this content.

Thousands of grandparents caring for their grandchildren over the summer holidays could be missing out on the chance to boost their future State Pension.

Many working-age grandmothers and fathers could qualify for Class 3 National Insurance credits for looking after children aged under 12 – which can be used to top up their income in retirement.

Half of Britain’s 7 million working-age grandparents have a grandchild under the age of 16.

Applications for NI credits for caring for children under 12 need to be made to HM Revenue & Customs (HMRC) and must be signed by both the adult carer and the Child Benefit recipient. Applications need to be made after 31 October following the end of the tax year in which the caring took place.

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/NICs_iForms/1.0&template=CA9176_en_0.5.xdp

Nanny believes she has paid too much in tax

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
Parents, nanny may come to you as the employer, and claim she believes she has been
paying too much tax in either the current tax year or previous years.
If relating to previous tax years it is best for nanny to contact HMRC directly by writing to
them with an explanation of why she thinks she has paid too much tax and she should
enclose relevant P60’s for the tax years involved. If it is then the case that she has overpaid
tax in a previous year HMRC would then issue a cheque directly to her.
If nanny believes she is paying too much tax for the current tax year, it is advisable that she
first contacts the employers payroll provider, such as us here at payroll4nannies to see if
they can help or she will need to call HMRC direct on 0300 200 3300 and will need to quote
her national insurance number and have other personal information to hand. HMRC will
issue a revised tax code if incorrect to the employer and any tax then previously overpaid in
this tax year would be repaid through the employer.

Expenses

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
If you pay nanny for mileage during work hours the mileage rate as per HMRC is 45p.
Anything above 45p is taxable and must go through the payroll. As an employer you must
keep records of mileage that you have paid out, you must only pay for miles traveled.
Simple putting £15 for expenses for general travelling is not acceptable and would mean it is
taxable.
By paying 45p a mile or more for getting nanny to and from work is a taxable, and would
need to be declared to HMRC.
Benefits in kind would arise when you let nanny have private use of your car, this benefit
would then need to be declared to HMRC annually by means of a P11d.
We would advise you to keep receipts from nanny that you have reimbursed her, for day
trips with the children and any shopping she has done.

NI Categories

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
There are various categories for employment in the UK for national insurance deductions,
below are the categories denoted by a letter and what they represent
NI Categories for UK employment
A – All employees who do not fall into B, C, J, H, M and Z
B – Widows and married women entitled to pay reduced national insurance
C – Nanny’s over the state pensionable age so does not pay NI
J – Nanny’s who are already paying national insurance in their other job so can defer it
H – Apprentice under 25
M – Nanny under 21 Employer pays no NI
Z – Nanny’s who are already paying national insurance in their other job so can defer it and
are under 21 years of age
X – Nanny’s who are aged under 16

Court Orders

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
Parents, you may during the course of nanny’s employment receive a Court order to make
deductions on her pay because of monies owed to a third party, this could be for unpaid
council tax, outstanding fines or from the child support agency.
As an employer it is then your responsibility to ensure that any such order is processed
correctly through nanny’s payslip and that the right deductions are made as per the order.
Any decent payroll provider will have the various different order types already installed on
their payroll software to ensure that the correct deductions are made.
Any payments to the relevant payee can either be made over the phone or via internet
banking and any instructions on how to make the payment are included with the order.
If you as an employer do not deduct the order from nanny’s wages you will be fined, it is
important to ensure that the correct deductions are made.

Things to consider when employing a non UK nanny

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
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_da
ta/file/441957/employers_guide_to_acceptable_right_to_work_documents_v5.pdf

Payment in Lieu of Notice (PILON)

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
Payment in lieu of notice or (PILON) is when a nanny has been terminated from employment
and not required to work her notice.
In nanny’s contract you can stipulate that nanny’s employment can be terminated by PILON
immediately and payment in lieu of her basic salary will be paid for the notice period, then
you will not need to pay benefits and extra costs that accrue during her notice period.
If in the contract PILON does not specify the pay for this period or no mention to PILON in
the contract, then you as an employer will need to pay benefits and extra costs for this
period.
Tax and national must be deducted from PILON.
In the case of gross misconduct, PILON is not normally paid to the nann

Nanny Leaving

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
Parents, as an employer it is your responsibility to inform HMRC when nanny leaves your
employment, this is done by an FPS submission via payroll software.
If you use payroll4nannies.co.uk we can handle this for you. The main problem we have
when nanny leaves, is that we get notified late that nanny has left. This means that we
submit to HMRC that nanny has been paid for a month when in fact she did not. This can be
corrected, but can lead to issues with nanny’s tax code in the meantime. The same can be
said for pensions. If we have not been told nanny has left, we will submit amounts to HMRC.
This can also be fixed but we will need to request the money back from the pension provider.
If nanny is leaving, you need to see if she is owed any holiday pay which she has accrued
and not taken, this would be paid in her final payslip. It also occurs nanny has taken more
than her holiday allowance, so the overpaid holiday needs to be deducted in her final
payslip.
It is prudent to detail in nanny’s contract that any holiday taken over her allowance upon
leaving will be deducted from her final payslip.
Once nanny’s leave date has been confirmed, you will need to confirm if any holiday pay is
owed or needs to be deducted, redundancy due or payment in lieu due, once confirmed
payslip would be finalised and a P45 can then be processed and submitted to HMRC.

Holiday Allowance for nannies

Our recommended partners at www.PayrollForNannies.co.uk provide payroll advice for
parents and have created this content.
A full time nanny is entitled to 28 days holiday (5.6 weeks) which includes bank holidays.
Employers are entitled to choose all the dates of holiday nanny should take, but in practice
nanny normally chooses 2 weeks while the employer chooses the other 2 weeks.
In your contract with nanny, make sure you ask for notice for nanny’s proposed holiday this
will allow you to find alternative childcare. Some employers ask for at least 4 weeks notice.
We would recommend you keep note of holiday taken paid or unpaid, just in case nanny
leaves part way through the year and has over taken on holiday. This way any unpaid or
over paid holiday can be paid/deducted in her final payslip.
If nanny works more than 5 days a week, their holiday entitlement is capped at 28 days. It is
not a problem if you agree more day’s holiday with nanny – this could be a condition of her
working for over a stated amount of time.
If nanny is part time, she is entitled to annual leave (28 days including bank holidays), but
pro-rated. So if nanny works 2 days a week, her holiday allowance is calculated:
2 days a week x 5.6 annual holiday allowance = 11.20 days holiday.
You must not round the holiday allowance down to 11, but can round it up to 11.5 days.
If nanny works different hours each week, you calculate her holiday pay by averaging her
last 12 weeks worked hours then multiply it by 5.6, this then gives you her holiday
entitlement in hours for the year and when she has a day’s holiday or was due to work on a
public holiday, whatever hours she was scheduled to work that day are then deducted from
her overall annual entitlement.