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Does this count as working/do I need to declare it for tax?(43 Posts)
I have a 9 month old, and am not going back to work until she is 1, but a friend with an 8 month old is going back to work next week. I offered to look after him as she was really worried about leaving him with strangers, so we have agreed that for the 2 days a week I will take my DD to her house for the 8 hours and look after them both there. She said she will give me £50 per week as she doesn't want to feel she's taking advantage, and also knows I have been a bit tight on money (am a single mum)
Does this count as work or is it just babysitting as it's nothing formal?
You should declare it, but unless your mat pay is exceptionally generous, you're unlikely to be liable for tax.
You will get loads of
childminders MNers telling you that it's illegal to look after a child for money unless you're registered!
Sounds to me like you will be working as a nanny, 16 hours a week. The fact that you happen to be doing it for a friend doesn't affect that.
You don't need to declare it for tax purposes, she needs to do that, and employ you properly, paying NI contributions, and giving you payslips, paid holiday etc.
She also needs to pay you at least minimum wage.
agent isn't there something about it being allowed if your in the child's house rather than 'childminding' at your house that makes it ok? Or have I imagined reading that?
If you are looking after the children in her house it is nannying, not childminding. She should be paying you minimum wage though, that's a legal requirement.
If you are on maternity leave, it might affect that?
To be honest if you keep quiet about it and don't tell anyone you are being paid no one would find out.
flowery what if she doesn't give me any money, is that allowed without holidays, NI so on ?
It is allowed in her house, yes. You don't have to be registered. But you'll be a nanny and must get minimum wage etc. Minimum wage is currently £6.19 if you are over 21, so for 16 hours childcare your friend should be paying you nearly double what she is proposing.
She may be concerned about leaving her child with strangers but the arrangement as she is suggesting it would also be saving her a considerable amount in childcare costs as two days nursery or childminder would cost more than that.
Well if you do it on a completely voluntary basis that might be different, although voluntary workers also have some rights where there is a regular expectation and commitment.
Would you really want to do this for free though?!
Realistically though, no one is going to investigate you. If you and your friend decide on an arrangement that works for you, keep the money in cash, and don't tell anyone you are being paid then it will be fine.
Why? What do you think will happen lougle?
What would happen if it was investigated? Would there be penalties or would we just have to formalise it and make up some holiday leave etc?
£25 for 8 hours is very very low pay. If you go to her house there is no registration or anything as it is being a nanny not a child minder. So the issue is whether your maternity leave allows it - most employment contracts say you cannot take a second job (read your contract and check). Secondly as said above you are not being paid the minimum wage. However I think it could probably be for expenses - petrol etc so I do not think you need to worry too much about the pay rate. Also it is £2600 a year if you do it for 52 weeks so is well under your single person allowance IF you have no other pay in that tax year. If you do have pay in that tax year then you should put it on your tax return and pay tax on it unless it is just for your expenses.
What if you had a car crash with her LO in the car and the LO was hurt? Are you insured?
Maybe you won't use your car - but surely you'll want/need to go out sometimes. What if you're pushing her LO in a buggy and the LO gets hit by a car. Are you insured?
Baby groups: who pays, you or her?
Food for the day: who pays, you or her?
Maybe you won't go out at all. What if you trip and break your leg in her house. Is she insured to cover your injury?
Your LO falls and cracks her head open in your friend's house - is your friend insured? How do you get your LO to A&E? Do you take your friend's LO with you?
I have known these, or similar, issues occur for nannies of my acquaintance.
Would the answer be the same if the OPs friend bought OPs weekly shopping as a thank you for looking after her child instead of cash?
Would u still have to declare it if no money is exchanging hands?
maja00 what could happen is the OP could end up getting diddled out of a significant amount of unpaid wages and holiday pay.
For the employer what could happen is a tribunal claim and trouble with HMRC.
And that's leaving aside all the examples CinnabarRed gives...
Cinnarbar my mum looks after my dd when i work. We dont discuss any of those things. How is this situation any different to mine?
Hundreds if not thousands of people use informal arrangements with friends for babysitting with small amounts of money changing hands. I really don't think that HMRC have a Babysitting Investigations Unit to ensure everyone is paying tax.
If the OP is happy to do some childcare for a friend in exchange for a small amount of money, and neither are claiming it's employment or complaining about holiday pay or minimum wage, then talk of tribunals seems a little... far fetched.
Any suggestion of "reward" over and above expenses effectively gives status of employee not volunteer so entitled to holiday pay, sick pay etc. I didn't think you could care for 2 under 1 without dispensation.
Do you and your DC never go to friend's houses Cinnabar? Would you really sue a friend if you got injured at their house?
16 hours childcare is not "informal babysitting". Informal babysitting is for a few hours on a Saturday night occasionally or similar.
Plenty of people may take advantage of people willing to work as a nanny without giving them employment rights and the legal minimum pay, but that doesn't mean it's ok.
Talk of tribunals is not at all far-fetched. If the OP and her friend fall out, which isn't, you know, outside the realms of possibility when childcare for little money is being provided by a friend, the OP may quite rightly decide that actually she does want her employment rights, and no one could blame her.
I've dealt with countless situations where employees have said at the start of an arrangement that is technically illegal that they are fine with it, only to change their mind later on and it all end up going very pear-shaped for the employer.
You're right - OP, if you're likely to sue/report your friend at a later date then best not enter into this arrangement.
We have been close friends since we were children, so if it wasn't working well I would just say at that point. I definitely wouldn't ever sue or anything like that!!
Friend has said she will leave food ready to be warmed up, and going out he can go in the buggy and DD still goes in her sling quite often (she's very petite) but they have a garden so plan to mostly stay home.
She's giving you £50 a week. This isn't a wage for employment, it's an informal exchange of favours. If you're going to be at her house two days a week, you'll be saving costs at home. Will you be eating your friend's food, maybe even using her washer & dryer?
I'd advise discussing all the details with her, so you both know what your expectations are. Then ring up HMRC to ask if you need to declare it. I suspect they'll say no, but rather safe than sorry!
but the regularity and duration of the arrangement make it an employment , regardless of the rate of pay. It isn't the odd hour to cover until friend gets home from work or an emergency.
An informal exchange of favours would be the OP looking after the friend's DS for a few hours and the friend reciprocating for a few hours.
Friend paying less than NMW for regular childcare in her home is not an informal exchange of favours.
Anyone working two days a week at their employer's place is saving cost at home, that isn't a favour the employer is doing them.
No one would advise the OP to work for a friend's small business in retail or in an office for two days a week for £50. Why do people think childcare is different?
I'm just imagining a post the other way round.
"I've been helping out a small business two days a week and they have been paying me £50 cash in hand, but someone told me I should be getting holiday pay and minimum wage, is that right?"
Cue outraged MNers advising the poster that yes she has been underpaid and is entitled to holiday pay, and how outrageous that the small business owner has taken advantage of her.
Flowery it will be nice to have a change of scenery and for DD to start spending more time with him especially as they're both only children. It's not like an office job!
It's not really work in my eyes, just doing what I do with DD x 2 for the two days.
Well, obviously you'll make whatever decision is right for you. I just wouldn't want you to go into it without your eyes completely open in terms of what this is and what your entitlements are.
So is the basic jist of this - I'm not breaking any laws with arrangement, friend should technically be giving holiday and contract, but will be fine as long as it doesn't get investigated?
I will show her this thread tomorrow (just incase she is concerned about me suing ) thank you!
You're not breaking any laws, friend should be officially operating as an employer, but unless you report her then it won't get investigated.
Strictly speaking it is employment if you are being paid to look after her child. But on the other hand the £50 per week could be for food, trips out, petrol money and so on.
You need to be careful of things like whether your employer allows working for other employers, and also in terms of whether you're claiming any benefits that mean income has to be declared.
Your friend will be in breach of all sorts and if she does read this thread..
Friend I would advise you to consider paying HopHop minimum wage and some holiday. I'm sure everything will go swimmingly and HopHop is obviously willing to do this for you, but should things go wrong for whatever reason, or for any reason HMRC have cause to investigate you, you are vulnerable legally.
A loophole is you do it as a favour and your friend gives you a gift of supermarket vouchers.
I see where you're coming from, Pearly, but payment is payment. If you did your usual job for someone, and they paid in vouchers or products instead of money, you'd still have to declare it. HMRC has rules for payments in kind.
In OP's case I am pretty sure £50 is more likely to be seen as expenses than wages, but would still advise a call to HMRC just in case.
I cannot possibly imagine what work-related expenses to the tune of £50 could be incurred by the OP nannying at the friend's home for two days with food provided.
Do you and your DC never go to friend's houses Cinnabar? Would you really sue a friend if you got injured at their house?
I wouldn't want to. I'd avoid it if I possibly could. But suppose I got the kind of injury that stopped me being able to work. Or, worse, my DC was left paralysed and needing 24 hour care. Then, yes, I would sue. I would have to, to get my DC the money they need to secure their financial future.
And I wouldn't feel bad about it, because I wouldn't actually be suing my friend. It would be a claim on his/her household insurance.
But that's assuming that I was on my friend's property for social reasons. The OP may well find that her friend's household insurance wouldn't be valid for a similar claim because the insurance company (who don't give a stuff about HMRC, frankly) would see it as a business arrangement.
We certainly had to extend the terms of our household insurance when we took on our nanny, to reflect the fact that if she were injuried in the course of looking after our children then it would have been a work-related injury.
She also had to amend the terms of her car insurance because she takes our children in her car. We make up the difference in her insurnance costs when she renews each year (i.e. her insurance company provides her with two quotes, one for normal social use and a second to include business use).
All this might seem hard nosed - it is hard nosed - but you have to think of these kind of things in business.
And, as a tax adviser, I can certainly confirm that £50 per week for two days' work would not be accepted by HMRC as expenses.
HMRC got 72,000 anonymous calls to its Tax Evasion hotline last year. All it would take is one call from someone your friend has irritated, and she could find herself investigated to buggery.
And, yes, HMRC is currently having a push on tax evasion and the black economy. It was awarded £1m more funding last year to investigate reports of tax evasion.
We have a nanny two days a week as well. As well as obviously paying her properly and giving her the requisite holidays etc, we do give her £50 petty cash for expenses. This covers food she buys to cook for the DC, playgroups for DC2, haircuts for them both, bus fares if they go on the bus etc
All these are work-related expenses a nanny might need to incur, however in our case the £50 usually lasts her about 2 months, perhaps a bit less in the holidays.
Certainly if the fees are under the annual tax allowance and there is no other pay in that year there is no tax or NI due on it.
The minimum wage is morally wrong anyway and an interference in the free market.
I have a friend who entered into an arrangement like this with another friend. Another mum at the school who was also a registered childminder found out about the arrangement and reported it so you do have to be careful.
You are being given money to perform a service. This is called "working" and the money is taxable. You cannot pretend it's anything else, or make up some lie about doing it for free and being "given a present".
There are plenty of rules and regulations that could completely destroy this arrangement. As far as the child minding goes, probably better to keep quiet.
As far as the income goes, the current climate is very much against tax-dodgers. IF this £50 per week would, along with your other circumstances, incur a tax bill, come clean. If not, keep quiet.
This is not legal advice. It's pragmatic advice, based on my perception of how you'd be treated by the authorities if they nosed into it.
God help you if the child comes to any harm while under your care. The world - which we have all helped create - will put on its judgy pants and you will be hung out to dry.
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