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Information
For Parents Employing Nannies
Once you have found your Nanny you will need to consider how to
calculate their wages.
The options are:
- Use
a payroll service - We can help you! Our Annual fee is £195.00
- Use
an Accountant - Can be Expensive
- Calculate
it yourself - Very time consuming
- Not
declaring employment - A criminal offence.
As an employer you are the key player in making sure that your employee(s)
pay their tax and National Insurance Contributions (NICs).
You
must
- Tell
HM Revenue & Customs when an employee starts or leaves
- Work
out accurately and deduct PAYE Tax and National Insurance Contributions
(NICs) from each employee every pay day
- Record
details of deductions and payments every pay day
- Pay
HM Revenue & Customs every quarter
- Report
details at the end of the tax year
- Give
each employee still working for you at 5th April a record of pay
and deductions at the end of the tax year on form P60.
You
may need to
- Deduct Student Loan Deductions every pay day
- Make
statutory payments to your employees such as Statutory Sick Pay
or Statutory Maternity Pay
We
will administer all HM Revenue & Customs requirements and provide
you with our experienced, friendly and professional service.
We will email or post you your employee(s) payslips.
All you will need to do is give us initial information on employee/employer,
advise us of hours or amounts if they vary, make payments to your
employee(s) on pay day and pay HM Revenue & Customs quarterly.
We offer a service for New and Established employers.
Nanny Share
Nanny
Share is when two or more families employ a nanny to look after
their children.
It is advisable for each family to set up a separate PAYE scheme
and agree a gross salary. This will result in a considerable saving
in National Insurance Contributions (NICs) for each party.
- All Families set up a separate PAYE scheme. This saves on National
Insurance Contributions (NICs) for each party. The families agree
a fair split based on gross salaries. Please note that net salaries
need converting to gross salaries based on the standard tax allowance
and the basic rate allowance for the split to be correct. One
family then applies the standard tax allowance and the others
apply the basic rate allowance. The family that operates the standard
tax allowance will pay the more net pay to the nanny and less
to HMRC. The families that operate the basic rate will pay less
net pay to the nanny and more to HMRC. The cost is calculated
fairly for each family. If the nanny works for one family on a
different rate or more hours the split can be calculated accordingly.
If you would like Way2paye to calculate the split for you please
do not hesitate to contact us.
- One
family takes control and splits the costs. Please note that this
is not always the cheapest option as the National Insurance is
higher on higher earnings. It is not advisable if the families
are not familiar with each other.
- The
Nanny requests a split tax code from the local tax office. The
Nanny must explain to the tax office that they work for two or
more families and that a net salary has been agreed. This can
take several months to arrange and not all tax offices are happy
to do this.
Savings
for parents
Employer
supported childcare vouchers
These are provided by your employer. If provided each parent can
be exempt from paying tax and national insurance on the first £55
per week they spend on childcare.
From October 2007 nannies need to register with Ofsted for employers
to use the employer supported childcare vouchers. Nannies that are
already registered will only need to apply to Ofsted when their
registration expires. Registration is valid for 12 months. Please
visit http://www.ofsted.gov.uk
to apply.
The current cost is £103 for a new application form. This includes
the CRB disclosure and needs to go through the post office verify
system which costs approximately £8 admin charge. Additional
costs will also apply if the nanny does not hold any professional
qualifications or a first aid certificate. You will also need Public
Liability Insurance we recommend that you use an insurance company
Morton Michel are experienced with nanny insurance and come highly
recommended.
Useful
Contacts
Insurance
We recommend that as an employer you check that your household insurance
policy includes an employer's liability insurance to protect you
if your nanny has an accident during working hours. Employer's liability
for domestic staff is often included as standard in most policies.
Please check this with your insurance provider.
Benefits in kind
The use of a car is only considered a taxable benefit if you allow
your nanny to take it home. If your nanny uses the car for taking
your children out for you this is not considered a benefit in kind.
If however you allow your nanny to take the car home you must report
it as class 1A national insurance will need to be paid. If you give
your nanny any benefits in kind please let us know and we will let
you know if a P11D needs completing for you and class 1A national
insurance is due.
HM Revenue & Customs Mileage Allowance for cars is currently 45p
per mile for the first 10,000 miles then 25p per mile thereafter.
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Helpful
advice for parents and their nannies - Tax Year 2011/12
Paying your nanny
You must provide a payslip to your nanny each payday including gross
pay, tax and national insurance and net pay.
Net - Gross
The nanny industry tends to talk net rather than gross. This is
not a problem as long as the nanny does not owe student loans or
has an unusual tax code. Agreeing a gross salary is always safer
in contracts. We can easily calculate net to gross or gross to net
payslips for you.
Click here for
our tax calculator to find your total cost or call us for calculations.
You may also need to calculate SSP and Maternity pay and deduct
student loans. We can do all this for you.
The National Minimum Wage as of 1st October 2010 is:
The main rate applies to workers aged 21 and over and is currently
£5.93 per hour. The age threshold for the main rate was reduced
from 22 to 21 on 1 October 2010.
The 18 to 20-year-old rate is currently £4.92 per hour.
The 16 to 17-year-old rate, for workers who are above school leaving
age but under 18, is currently £3.64 per hour.
Nannies that live as part of the family household and do not have
separate accommodation are excluded from the NMW. For employers
who provide separate accommodation for their nannies there is an
allowance of £32.27 Gross per week (£4.61 per day) this can be offset
against the NMW hourly rate.
New rates for Minimum wage from October 2011
The main rate applies to workers aged 21 and over and is currently
£6.08 per hour.
The 18 to 20-year-old rate is currently £4.98 per hour.
The 16 to 17-year-old rate, for workers who are above school leaving
age but under 18, is currently £3.68 per hour.
Holiday Pay
All nannies are entitled to holiday pay.
Holiday entitlement begins from the first day of employment but
cannot be taken until it has been accrued (e.g. one day's holiday
after 13 day's work). Part time employees are entitled to 5.6 weeks
of the hours they work. You can agree with your nanny at the start
of the employment that they take some of their holiday when you
take your own annual leave.
New Holiday Legislation - The Working Time (Amendment) Regulations
2008
In brief the minimum holiday entitlement has increased from 4 weeks
per year to 4.8 weeks per year from 1st October 2008 and increased
again on 1st April 2009 to 5.6 weeks per year.
All employees are entitled to 5.6 weeks holiday from 1st April 2009
i.e. Employees' that work;
- 1 day get 5.6 days holiday per year
- 2 days get 11.2 days holiday per year
- 3 days get 16.8 days holiday per year
- 4 days get 22.4 days holiday per year
- 5 days get 28 day holiday per year.
Whether or not this additional leave is taken on a Bank
Holiday is up to individual employers to agree with their workers.
Employers may choose to offer more holiday than this.
Statutory Sick Pay
The current rate for SSP (statutory sick pay) is £81.60 per
week. If your nanny is unable to work through sickness then you
must either continue to pay as usual or pay SSP. SSP is payable
after three days of absence. Join Way2paye today and we will calculate
it and claim any SSP back from HM Revenue & Customs on your
behalf.
Statutory Maternity Pay
Statutory Maternity Pay (SMP) is paid for a maximum of 39 weeks
from 1st April 2008 to employees who meet the qualifying conditions.
Small Employer’s can recover 100% of SMP Gross Pay plus 3%
compensation.
Contract of employment
As an employer you must provide your nanny with a written statement
/ contract of employment within 2 months of them starting their
employment with you. Many Nanny Agencies provide either contracts
or example contracts for you. If you do not have one please contact
us. Please be aware that the contract is important, we advise to
think carefully if you are a small employer regarding sick pay and
carrying holiday entitlement forward.
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