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Nanny tax allowance question

(41 Posts)
hyperspacebug Wed 19-Feb-14 12:55:37

Our situation with nanny is thus:

She works 1 day a week for other family (9 hrs at £10pph = 90 pounds, no tax), she used to work for them for much more hours.
She is with us 3 days a week for 11hrs per day. (total 33hrs = 330 per week)

They are her first employers. We are the second employers.

How should the tax allowance split fairly please?

hyperspacebug Wed 19-Feb-14 13:07:56

It's 10 pounds net, not gross!

Picturesinthefirelight Wed 19-Feb-14 13:17:07

Assuming that she has filled in a P46 declaration with her other employer so they don't have to deduct any tax you will have to deduct tax at Basic Rate which means deduct 20% from her gross income.

She can if she wishes write to the tax office requesting that her tax code be split between the two of you. If this happens the tax office will write to you & tell you what code to use.

Picturesinthefirelight Wed 19-Feb-14 13:22:49

Do you use a nanny tax company or administer your own PAYE scheme. It all has to be filed electronically now. The software you use tells you what tax code you have to use when you enter a new employees details according to what bix they have ticked on the P46 or whether they have given you a P45.

An agency will probably use commercial software. A small employer with less than 10 employees can use HMRC free Basic Tools software.

Cindy34 Wed 19-Feb-14 13:51:45

HMRC will send you a coding notice if they want you to use a different tax code.

Agree a Gross salary, not net.

If doing PAYE paperwork yourself, refer to guidance on Employee with no P45.

Karoleann Wed 19-Feb-14 13:55:19

Its fairly easy to split a tax code, she just needs to call up HMRC (you can't do it for her).
I think you should split it. 75% your family and 25% other family as those are the days she works.
The personal tax allowance for 2014-2015 (starts on April 5th) is £10,000 so she'll get £2,500 for the other job tax free and £7,500 for your job

hyperspacebug Wed 19-Feb-14 14:31:12

Yes we use nanny tax company. We have just found out that the remaining allowance has been wasted (into empty space) and that we have been paying too much tax for the past 1.5 years. We had no idea :/

If allowance is 149 per week, we get only £59 saving (so even less after NI). Even though the nanny works 33hrs for us as opposed to 9hrs for them. But they are her first employer and they said they definitely can't afford more. They are good people so none of us want the nanny to dump them.

hyperspacebug Wed 19-Feb-14 14:34:48

Trying to think of happy solution for everyone, without us paying for them, basically!

Picturesinthefirelight Wed 19-Feb-14 14:41:45

If your nanny has overpaid her tax which is common if you have two jobs then she can apply for a refund at the end of each tax year.

My dh does this. He used to work 1 day a week for one college & two days for another. He was on basic rate for the second college so at the end of the year when he got his P60s he sent them off & got a cheque back

I think the complication in your case us that you appear to have negotiated a nett not a gross salary. That is really dangerous because the tax office can change a persons code for lots if reasons (unpaid self employed tax/NI, change if circumstances/second job/perks etc)

You need to reconsider this.

Karoleann Wed 19-Feb-14 14:43:03

I don't think there is an easy solution, but its not fair that you should be paying more than you should for your nanny.....next time make sure you agree gross!

Maybe just agree to split it 50/50?

Picturesinthefirelight Wed 19-Feb-14 14:44:19

Basically what I am saying us that you as an employer should not be paying any of your nannys tax

What you should be doing is deducting her tax from her wages on behalf of HMRC.

Picturesinthefirelight Wed 19-Feb-14 14:45:17

She's probably claiming it back as I detailed in my previous post do getting a nice little cheque each year on top of what you pay her.

drivenfromdistraction Wed 19-Feb-14 14:51:58

I know it's a bit late now, but you are bonkers if you agreed a net wage for the nanny. The standard now is to agree a gross wage. Then there's no complication. Nannytax will just calculate the payslip and you pay the nanny the figure on the slip. Every 3 months you'll have to pay HMRC the employer's NI etc. - Nannytax calculate that for you too.

If I were you, I would renegotiate a gross hourly wage for your nanny.

Picturesinthefirelight Wed 19-Feb-14 14:52:01

The problem is Karolann is that two separate employers cannot come to that kind if agreement by themselves.

Each employer must deduct the amount if tax that HMRC instructs them to. Since April & the introduction of Real Time Information it's all automatically generated.

Only the nanny can request that her tax code be split between her two employers.

minipie Wed 19-Feb-14 15:04:02

This is exactly why I agreed a gross rate instead of net. Is it really too late for you to do this OP?

hyperspacebug Wed 19-Feb-14 15:08:34

Sorry for dense question...what's the difference between paying nanny net pay (and pay tax using nanny tax company) and us paying her gross salary?

Especially she'd demand her net to stay the same.

hyperspacebug Wed 19-Feb-14 15:09:35

(and not affect her take home pay - she'd be really firm about this as her husband can't work and she's scraping by as it is)

hyperspacebug Wed 19-Feb-14 15:11:58

Can we claim refund for overpaying for the past 1.5 years?

Picturesinthefirelight Wed 19-Feb-14 15:13:18

You can't claim but she can.

hyperspacebug Wed 19-Feb-14 15:15:52

Thanks.

Picturesinthefirelight Wed 19-Feb-14 15:16:47

You can't claim but she can.

TheScience Wed 19-Feb-14 15:18:45

If the other family agreed £10 per hour net with her, why would they want to agree to splitting the tax code?

Sounds like you were all foolish to agree net, why on earth wouldn't you pay her gross like everyone else?

Picturesinthefirelight Wed 19-Feb-14 15:19:09

Sorry am at work (payroll) so trying to post short whilst not being seen!

Picturesinthefirelight Wed 19-Feb-14 15:20:42

Assuming her tax code is BR with your employment then add 20% so it would be £12 per hour.

Picturesinthefirelight Wed 19-Feb-14 15:22:01

No, that doesn't work out. She's then get £9.60 nett. Hang on

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