Grandma's as childcare

[thegrowlygus]

Hello. Hope someone may have some ideas on this one.

We are considering 'employing' my mil to provide childcare for our 2 sons. This is due to her being recently made redundant and our eldest about to start school leading to childcare issues. So in the most basic sense, paying her a wage (more than what we'd be paying nursery + childminder but less than a nanny) seems a good plan. Mainly because the boys would be with someone they love and trust, (and we love and trust!) but also it solves all the school holiday/pick ups problems.

My question that I hope someone can help me with is this - are we better to employ her as a 'nanny' and so pay her a net salary and her tax and NI, or is she better to be self employed and we pay her a gross salary and she pays tax and NI? Does is make a difference? Are we allowed to do either way or not? Or is it better to do it through someone like the nannytax website? Or not because she isn't a 'nanny' she's a 'nana'!!

I just don't understand the tax issues here.

And I do already appreciate the pitfalls of having a family member 'working' for you etc. - we would have some sort of clear contract for hours etc. We don't want to take the pee, as it is 2.5 days of childcare we are needing, but also if we could afford a nanny then we would be getting a nanny - if you get me.

Any ideas anyone?

[thegrowlygus]

OMG stray apostrophe in my heading. Sorry about that.

Is that why no one has replied? My appalling lack of grammar?!

[hermionegrangerat34]

Crumbs, I'm doing the same in the autumn and tax hadn't even occurred to me! I think i'll carry on paying my mum the amount i was going to pay her anyway, and assume that any tax implications are up to her to sort out...I hope that's OK! If i have to pay tax too it definitely isn't worth my while, might as well use nursery.

[KatyMac]

If she is working at your house as a nanny you would have to pay her Tax & NI - you can't be a self-employed nanny (well you can but only under very special circumstances)

If she works in her own home I guess she could register as a childminder but it gets a bit complicated

If you have someone providing childcare for you at your house you are responsible for the Tax & NI

(BTW - this is AFAIK.....NannyNick will confirm/deny, when he sees the thread)

[flowerybeanbag]

It's not a question of what's 'better'. Neither you as the employer nor your employee get to decide whether she is self-employed or employed. Employment status is defined by the nature of the relationship between you, you don't get to choose which is most convenient.

As a nanny providing childcare at your home she would be employed. It is possible to be a self-employed nanny but only really if you work for several different families, or do very short term placements like a maternity nanny or similar. Your MIL in these circumstances would be employed, meaning you would be responsible for paying her tax and NI.

Just because she would be employed as a 'proper' nanny would doesn't mean she has to cost as much though, obviously. You will agree the amount between you but minimum wage is £5.73 at the moment iirc, which is a gross figure.

Hermione your mum won't be self-employed, you will be employing her, so you will be responsible for paying her tax and NI. But if you have agreed a gross wage with her on the basis that the tax implications of her employment will be 'up to her to sort out', then it shouldn't cost you much more to do it legally anyway. If she is anticipating paying tax out of the gross wage you have agreed, you will just need to deduct it and pay her the net instead.

[ChasingSquirrels]

or she could just be a granny looking after her grandchildren.
and you could be a child gifting some money to your parent.

??

[thegrowlygus]

Yes sorry - by 'better' I meant which is legal or right, not which is the cheapest way!