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Why in 2016 are parents still wanting to pay nannies in cash

(34 Posts)
Yerazig Wed 23-Mar-16 16:26:50

I've been job hunting for the past few months and it's becoming a worrying occurance how many families think it's ok to offer a full salary in cash. I don't understand surerly you must think highly enough of the person looking after your child, that you wouldn't be doing something so illegal like that. I don't understand how so many families it doesn't even register in their mind not to pay us in cash.

SocksRock Wed 23-Mar-16 16:44:31

It's not illegal to pay in cash unless you are avoiding tax and NI - is this what the families are suggesting?

TreadSoftlyOnMyDreams Wed 23-Mar-16 16:46:51

I've had multiple nannies stipulate that they don't want to be registered for tax and to be paid in cash too. It cuts both ways.
It's cripplingly expensive to have a FT nanny. I can completely understand why people would be tempted to avoid the tax man. Legally the penalties fall on the employer rather than the employee so I would not be brave enough to risk it.

BIWI Wed 23-Mar-16 16:51:27

Because doing it legit

BIWI Wed 23-Mar-16 16:52:17

Whoops!

Because doing it legitimately is hugely expensive and you're paying tax out of your own taxed income.

Buckinbronco Wed 23-Mar-16 16:54:57

What's wrong with paying cash?

Yerazig Wed 23-Mar-16 17:16:59

Sorry let me rephrase it. Meaning they want to pay the nanny cash in hand and avoide paying tax and ni. I 100% get how expensive childcare is. But like many hundreds of thousands of people you stay at home if you can't afford to pay out for childcare.

Cindy34 Wed 23-Mar-16 20:58:37

Are there any common factor about such parents, such as very high earners (over £150,000 say) or is it just low earners (say under £20,000) or does it really not seem to differ at all between, hate to say this, social class.

Do they simply not understand about taxation in the UK or are they deliberately trying to avoid it?

Has this got worse in the past year, as more has been publicised about small employers needing to give their employee a pension?

Do you think this situation will change when the new childcare system starts and Government contributes up to 20% of childcare cost?

Sorry for all the questions. I can see that they don't want to pay employers NI, they don't want to pay employers pension contribution, they don't want to pay payroll admin costs, they don't want to be real employers... but shouldn't nannies have the right to be a real employee?

BIWI Wed 23-Mar-16 22:29:24

Nannies absolutely do have the right to be treated as legitimate employees, and they should be.

However for anyone who is employing a nanny for the first time, it comes as a huge shock to discover just how much you have to pay for said nanny. Not just their salary, but also the tax and NI.

It's entirely understandable that many people want to pay their nannies either a net salary, or cash.

That's not to say it's right, obviously. But to state But like many hundreds of thousands of people you stay at home if you can't afford to pay out for childcare this is a little/deliberately naive.

Childcare is a huge cost to working parents. And it's not just the cost of it, but it's also the opportunity cost of childcare. When I had DC2, it actually cost me more to go to work than to stay at home. But that was the cost to me of preserving my career. So it was worth it for me. (As well as, naturally, making sure that I was paying for top quality care for my children. And, for the record, before anyone starts, I always paid their tax and NI up front and totally legitimately)

Cindy34 Wed 23-Mar-16 22:51:12

Parents do not pay the nannies income tax, they deduct it on the nannies behalf (and should save it in a an account) and pay it to HMRC once every three months - in the same way their employer does for them, if they are an employee.

Employers NI is the big tax that is 'hidden' but nanny agencies and payroll companies should be talking to parents about that and they may even provide a projected statement for how much that is likely to cost, on a monthly or yearly basis based on the current financial year.

So is the problem a lack of information? Is the problem anything to do with Net wages still be advertised/requested?

Cindy34 Wed 23-Mar-16 22:54:10

Childcare is a huge cost - no arguments there. Even Government seem to be appreciating that a bit more by offering to pay towards it, in various forms, though as always it is subject to eligibility.

Backingvocals Wed 23-Mar-16 22:56:12

Because almost no other type of employer is expected to pay salaries, pension and tax out if their taxed income. I run a company and all our staff costs are paid from untaxed revenue. Only for my nanny am I expected to pay tax out of taxes income hmm

Yerazig Thu 24-Mar-16 05:54:25

Maybe working in childcare I am more aware of the actual cost of paying out for childcare. Are people really that naive assuming the child was planned, that you don't look at how much it would be to place your child in a form of childcare.
And to answer a question I've been nannying for the past 8 years now. And have only had to start job hunting again recently. There does seem to be a higher percentage of parents offering the nannies salary cash in hand and no going down the appropriate route of employing someone. Since last week Friday out of about 4 mums I spoke to 2 matter of fact told me the salary would be in cash and they would not consider actually legally employing someone. But on the other hand it does not help that there is no regulation when it comes to employing someone in a private home. So lots of people hear about their friends having a "nanny" who's happy to be part paid in cash part through a pay roll company and think it's the norm.
I think it's part of the reason why many older experienced nannies go via an agency to find a job. As you cut out the type of families that I have an issue with.

littleladyluna Thu 24-Mar-16 11:24:23

I think there are a few issues here:

- the vast majority of nannies I know only discuss in net terms, they actually don't want to talk in gross as they like the certainty of a net agreement (at whatever cost to the employer)
- tax relief for childcare is ridiculously low, and of course, those childcare vouchers must be paid to an OFSTED registered provider, which some nannies are reluctant to become.
- agencies work as an "introduction service", and while there are some who help greatly, others have no idea how taxation works, or the implications of perpetuating these net agreements.
- parents aren't aware. Cleaners can be paid in cash (domestic workers), so why not nannies? I am aware that nannies are not cleaners but was trying to illustrate a point about thought processes.
- nannies don't know what to ask for, and parents aren't sure what they need to do to formally employ someone
- nannies are taken advantage of because they don't know what they should be asking for, which can sometimes lead to parents sweep legality under the carpet
- their last nanny took cash, and they are comfortable with this arrangement.

It is a minefield, however I think if more nannies quoted gross and refused to work for parents who were not prepared to pay legally then we would see a drop in the prevalence of this attitude. Unfortunately, for every nanny who wants to be paid properly, there is another nanny happy to be paid under the table.

writingonthewall Thu 24-Mar-16 12:19:21

All good points made above - the other thing is that the govt can't decide if nanny employers are employers or not

We get all the responsibility of being an employer, but none of the benefits. No-one else pays their employee out of taxed income - tax is calculated after you pay your employees for any company. Also, small businesses get an NI exemption which is specifically denied to nanny employers. The loss of reimbursement for SSP was the thing that made me finally decide to cut down on work hours as I ( a well-paid GP with over 10 years experience) was taking home about 2/3 of what I was paying my nanny.

A full time nanny will take the first 70-80,000 of their employer's income, you only start to take any money home after that, so it really is the refuge of the very wealthy these days.

sephineee Tue 29-Mar-16 15:40:43

Very common round here. Pisses me off as all the people that do it this way are richer than us (and we do it properly to be clear..!).

it is hugely expensive to have a nanny - except if you have three children and then its the cheaper option!

Hamsolo Thu 31-Mar-16 22:15:14

We found the opposite. We insisted on paying tax and NI, and our nanny was upset about it as her previous employer had paid her cash in hand, so she felt she was getting a poor deal.

Cornwall73 Thu 07-Apr-16 08:33:40

We do it legit and offer a proper contract and pay tax and NI. Our previous nanny loved it, first time she had ever been paid like this in nearly 10yrs and she had never had paid leave before or been 'registered' for NI. When she left we offered the job and the nanny found it all too restrictive didn't think she was getting a good deal.

Blondeshavemorefun Thu 07-Apr-16 12:33:03

Parents offer and do cih as some nannies accept it

I know 2 who do it. Bugs the bloody life out of me. Even more so that one claims benifits as well !!!!!

Disgussing gross helps as then the employer knows what the nanny will cost them a week

Ie 30hrs @£13 gross so £390 plus employers ni

Or 50hrs @£11 gross so £550 plus ni

I do think it's unfair that those who use professionals as childcare have to pay their salary out of their nett wage

Should be taken out of their gross wage and then taxed on the remainder

And abolish employers ni

What does it do? Where do it go?

mumoftwoboysgl Tue 12-Apr-16 21:56:33

I am currently searching for a nanny and have been surprised by the number I have interviewed who are being part partly in cash by their current employers.

We have always done things properly and have reported all income, paying the net amount to the nanny and the tax and NI to HMRC. I feel strongly that every employee is entitled to this method of payment, as it is important for getting a mortgage, access to statutory maternity pay etc.

We are lucky to be able to afford this, we make sacrifices but I do appreciate that many could not afford it even with sacrifices. HOWEVER, in my experience, a lot of the families who are paying cash could afford to operate correctly and it is a choice to save money rather than a necessity.

It also makes it more difficult to pay a competitive salary, because it costs us a lot more to do it properly than it costs someone to pay cash the nanny - therefore we can't always match the net salary.

It's also illegal, but I suspect that HMRC are too incompetent to ever catch up with many of the employers paying cash.

budgiegirl Tue 12-Apr-16 23:29:02

No-one else pays their employee out of taxed income - tax is calculated after you pay your employees for any company

But employing a nanny is a private arrangement , a nanny is not employed by a company. Financially, it's no different if you pay your nanny gross, and she sorts out her own tax and NI (as you would with a childminder, gardener, cleaner etc), or whether you pay her net, and you pay her tax and NI directly to HMRC. The cost is (or at least should be, if done legitimately) the same.

I can see though, how the system is open to abuse, and also how it can be confusing when many nannies quote their expected wage as net.

writingonthewall Wed 13-Apr-16 05:41:23

But budgiegirl a nanny is an employee and the only type of employee who has to be paid out of taxed income.

budgiegirl Wed 13-Apr-16 07:52:56

But budgiegirl a nanny is an employee and the only type of employee who has to be paid out of taxed income

Well, yes, I understand that of course, but the situation is not the same as a company employee. It is a private arrangement, and therefore should be paid for out of taxable income. The fact that a nanny has to be an employee is really just a technicality to give stability to the nanny as she can only work for one family (or possibly two) at a time.

If a nanny were to be paid out of non-taxed income, then surely it would only be fair to allow other families to be pay their childcare costs to child minders, nurseries etc from non-taxed income? Not a bad idea maybe! But not the situation as it stands at the moment (with the exception of a small tax break for some from child care vouchers)

TreadSoftlyOnMyDreams Wed 13-Apr-16 09:22:21

budgiegirl Nannies are not allowed to sort out their own tax and NI. The employing family have to do this unless the nanny can prove to HMRC that they are self employed which appears to be working 3+ different jobs.

writingonthewall Wed 13-Apr-16 09:35:52

Yes. Work related expenses should be 100% tax deductible. How does anything else make sense in getting people back to work?

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