Tag: tax

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. 

New Tax Level Information for Working Nannies

New tax level information for working nannies

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

The standard tax code for tax year (19/20) is 1250L, this then means an employee (a nanny) can earn £12,500.00 per annum before they pay any tax. This figure is then spread over the relevant pay periods in the tax year (52 if weekly and 12 if monthly) this then gives the tax-free allowance for each pay period.

Continue reading “New Tax Level Information for Working Nannies”

When nanny has a second job

Part time working has been on the rise in all industries but nannies are being hit by a triplewhammy of parents choosing to work part-time, using free help part of the week to reduce childcare costs and taking advantage of Government funding. This means more and more nannies are coming to interview with another job already, which can seem an administrative nightmare. Chin up though, as it’s not that scary!

Continue reading “When nanny has a second job”

Nasty payroll surprises and how to avoid them

It’s the time of year when parents are doing their first payroll run with a new nanny and if your initial sums were out it can be an unpleasant experience discovering that you’ve got a higher bill than you thought you had.

Problem #1 Nanny has another job

Even if it’s a Saturday job, if she had that job first she’ll be on a BR tax code with you, which means no tax free allowance and all earnings taxed at 20%. It used to be possible to split tax codes but HMRC are very reluctant to do that since real time information (RTI) was introduced. If you agreed a net salary then you are liable for all the tax and National Insurance contributions, which can be a lot more than you bargained for.

Problem #2 Nanny has a student loan

Student loan repayments kick in above £325/week (£1,409/month or £16,910/year) gross.  9% of the amount above this salary needs to be paid to the Student Loans Company on the nanny’s behalf, and you’re also liable for this if you agreed a net salary, which if a nanny is earning £2,250 a month is an extra £75. Nannies with degrees are becoming increasingly common, and most of those who have studied in the UK will have taken out a student loan. An even nastier surprise is where you think you’ve employed a nanny and are paying under the repayment threshold but overtime has pushed them over.

Problem #3 Nanny has a special code      

HMRC allocate codes based on an individual’s situation. Most people with one job will have a standard tax code (for 2014 this is 1000L), however if a nanny has to pay back tax which was underpaid in previous years or receives benefits in kind they may have a special tax code which reduces their personal allowance (for example 700L which means they have a personal tax allowance of only £7,000 for the year), increasing your tax liability if you have agreed upon a net salary.

The simplest way to avoid any nasty surprises your end is to agree a gross salary in the contract. That way you know what your costs are, and you deduct the amount of tax (and anything else) your nanny is required to pay rather than adding to your bill.