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Stealth tax on working parents? Little publicised change from April means families with Nanny could face £2500 bill for statutory sick pay *in addition* to replacement childcare costs

(122 Posts)
nexusseven Thu 27-Feb-14 15:30:35

This must be a candidate for a Mumsnet campaign!!

Employing a Nanny is about to get much riskier. Previously, as a micro employer, families could reclaim Statutory Sick Pay from the Government if Nanny needed time off work through illness or injury. From April this will end.

So if Nanny has the bad luck of falling seriously ill, needing an operation or breaking a leg, families will need to foot a bill of up to £2,500 in SSP in addition to the cost of replacement childcare.

NB the cost is the same even if Nanny is part time: SSP is a flat rate to all those earning over £109/wk.

The change has been really badly publicised. Obviously it's bad news for all micro-businesses, and is just starting to attract some adverse comment amongst accountants, eg:

https://www.accountancylive.com/statutory-sick-pay-reforms-%E2%80%98catastrophic%E2%80%99-small-firms

But no-one seems to have picked up the serious implications for nannies and their employers. Financial liabilities for families, and therefore likely fewer jobs for nannies. Overall a serious blow to childcare options for working families.

What can we do about it???

Onesleeptillwembley Thu 27-Feb-14 15:39:51

How is that a tax on working parents? What an absolutely stupid statement.

nexusseven Thu 27-Feb-14 16:25:19

I appreciate it's emotive language but I am pretty cross.

A tax is a compulsory contribution to state/government funds.

Previously SSP was reclaimable from the government in recognition of the crippling effect that bearing statutory (ie required by the government) sick pay could have on micro-businesses. Risk sharing to help job creators if you like. The same is true of statutory maternity pay.

I still have to pay SSP as required by the state, but no longer have the facility to reclaim it should my employers NI contributions be exceeded by the SSP liability. Ergo I and other working parents employing a Nanny are faced with an additional mandatory contribution to state finances (by paying something that previously was collectively financed).

Sounds like a tax to me.

Onesleeptillwembley Thu 27-Feb-14 16:34:39

You're not forced to employ a nanny. You can't be so stupid as to see this as a tax, however hard done to you feel. You may get people to listen if you stop being so silly.

nexusseven Thu 27-Feb-14 17:00:35

No of course I could just make her redundant (the change was "announced" after I employed her). But that seems pretty morally dubious, and possibly legally too. I say "announced" as it has been so poorly publicised that even the specialist bodies are only just catching on. HMRC have admitted it's a shambles.

What would you call it?

Onesleeptillwembley Thu 27-Feb-14 17:16:28

A change in the law. Stop having a tantrum. There's probably no getting through whilst you're frothing and drama queening. I'll leave you to it.

Cindy34 Thu 27-Feb-14 17:40:55

Is this a change to the Percentage Threshold Scheme, the Statutory Funding scheme or both?

Paintyfingers Thu 27-Feb-14 17:52:28

Sounds like a stealth tax on working parents who pay nannies to me!

Cindy34 Thu 27-Feb-14 18:09:00

Having done some reading, it is the PTS. Can't find mention about Statutory Funding, though not sure how that helps in the case of SSP.

It will be a problem if a nanny is off on long term sick due to cancer, brain tumour, mental conditions. For physical conditions the new Health Welfare thingy seems to provide access to physiotherapy, though I see that it does not start until end of 2014, plus not sure about the payment for that, says that under 500 is not taxable but surely that is still a payment someone is having to make.

Government cutbacks are happening all the time as are increases in costs, has your council tax gone up?

This change does not affect just nannies but will affect every small business, so will include small independent nurseries, pre-schools, before/after school clubs and childminders who have paid assistants. Any business with 5 or less employees I think this affects.

Will it stop people employing a nanny, stop people starting a small business... I don't think so. It is one of the things to worry about IF an employee goes on long term sick, until then many probably worry about it. Maybe one/several of the insurance companies will develop a policy to cover the cost of SSP, you never know.

nexusseven Thu 27-Feb-14 18:14:13

Cindy34 I think it's the abolition of the Percentage Threshold Scheme. Don't know what the Statutory Funding scheme is, haven't come across that yet?

nexusseven Thu 27-Feb-14 18:28:45

Cindy34 Sorry posts just crossed in the ether. And maybe some people will still be prepared to take on the risk of hiring a nanny, and I'm sure businesses will still start. But more will fold, and I imagine it won't help the employment prospects of the older or disabled worker or anyone else who might be perceived to be at greater risk of needing time off....

Had this been the situation when I was assessing childcare options there's no way I would have employed a nanny. My nanny has just been told she needs major surgery with 3 months recuperation. Although I only employ her two days a week, and share with another family to bring the cost down, both I and the other family will be liable for SSP almost equal to what we pay in salary.

A change in the law with unavoidable financial consequences? Sounds like a tax to me onesleeptillwembley....

Paintyfingers Thu 27-Feb-14 19:37:47

Can you cover it off with insurance in some way?

nexusseven Thu 27-Feb-14 19:42:14

Thanks for the thought Paintyfingers - but not sure what insurance you mean? In the future it's possible that products might be developed as Cindy34 suggests. However as my nanny has already told us she needs treatment no insurance company would ever cover that.....

NomDeClavier Thu 27-Feb-14 22:33:24

Small businesses will get the £2k creating a new job hand out that, surprise surprise, nannies don't count as employees for. Double whammy for nanny employers.

morethanpotatoprints Thu 27-Feb-14 22:42:49

Sorry to be a bit dumb here but shouldn't an employer pay sick pay?
If you employ somebody aren't you already responsible for this and PAYE/tax/NI?
Who do you want to pay your nannies sick pay?

Quangle Thu 27-Feb-14 22:46:20

the point is very small employers must pay ssp but can currently claim back ssp from govt and will no longer be able to. That's scary. How on earth has this crept through without any notice?

ceeveebee Thu 27-Feb-14 22:55:27

Thank you for bringing this to my attention - I hadn't heard about this. I have emailed our payroll agency to see if they have any advice - will probably get an insurance policy to try to cover this.

nannynick Thu 27-Feb-14 23:02:54

I wonder if this will mean employers rethink salaries. They may need to put some money aside for covering the cost should it be needed. Their own form of insurance.

Wonder if any insurer would create a scheme. Personal accident cover exists but does not cover for illness.

ceeveebee Thu 27-Feb-14 23:15:03

You can get permanent health insurance which will pay 50% of salary. But not sure if you can get a policy to cover just 1 employee (think most 'corporate' schemes require at least 2 employees). Hopefully insurance companies will see an opportunity to develop a new product if one doesn't already exist.

Cindy34 Thu 27-Feb-14 23:27:31

Is SSP taxable? So does employee pay income tax on it?

Permanent Health Insurance I believe would be taxable, if it came from insurer to employer to employee, or from insurer to employee.

ReallyTired Thu 27-Feb-14 23:35:13

Would it be possible to have the nanny employed by an unbrella company in a similar to to computer contractors (Ie. the nanny technically employed by the payroll agency). I think this law is a whole can of worms generally.

Cindy34 Thu 27-Feb-14 23:46:42

ReallyTired, no that did happen many years back or maybe I am thinking of the nanny running their own company... the loop hole was closed, I think as part of IR35 legislation.

In the nursery sector, temp nursery staff can be an employee of the agency but they rarely work for any client (nursery) for more than a week, often it is just a day.

nexusseven Fri 28-Feb-14 07:16:18

Ceeveebee would be interested to hear what they say. I am also livid with my payroll agency for not alerting me to this when it was announced (Budget 13). If they are not there to provide advice on payroll issues then what exactly am I paying for? Someone to press a button on some payroll software...?

Nearly a year later and they still haven't done anything proactive as far as I can see: clueless.

NomDeClavier Fri 28-Feb-14 07:18:50

ReallyTired it is possible, there are three companies who do this, one a large nursery chain that offers a hybrid service.

NomDeClavier Fri 28-Feb-14 07:19:51

Oh and I believe one leading payroll agent at least has made representations to the Govt on this, but presumably not got anywhere.

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