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Quick question for parents re: nanny tax

(29 Posts)
Smerlin Sat 22-Mar-14 13:35:21

Was dead set on using a childminder for when I go back to work but am starting to lean towards a nanny share as am worried about the ratios of a childminder.

Is it much much more expensive than a CM? Am doing my research on gross pay, NI etc etc and the one thing I can't find info on is how much nannytax charge for managing your payroll for you. Does anyone use them ? How much do they charge?

TheScience Sat 22-Mar-14 13:38:15

Usually those companies are £100ish a year I think.

How many children do you have? A nanny probably works out 2-4 times more expensive depending on where you live.

AuditAngel Sat 22-Mar-14 13:46:07

I would consider whether or not you have a choice of using child care vouchers with a childminder (some do) or a nanny (probably unlikely) and I second the point about the cost of a nanny once you have grossed up the salary.

When you are talking about a nanny share, do you mean full time care from a nanny looking after children from 2 families and you share the cost? Or a part time nanny? If the latter, please be aware that the main family (with more hours) get to use the Nanny's personal allowance while you wouldn't. This is relevant because nanny pay is usually agreed at a net pay then grossed up with the employer bearing the cost of grossing up.

Also, try to get something into the contract about not having to bear the cost of any old tax the nanny has to pay as this is often adjusted via the PAYE coding.

TheScience Sat 22-Mar-14 13:49:25

If you simply offer/agree a gross wage then there are no tax issues - it doesn't make a difference to the employer if the employee has another job or owes tax.

Smerlin Sat 22-Mar-14 14:31:23

I would be looking to agree a gross salary as that is what nannytax recommend but was looking for a nanny to share with another family but only for 3 days a week - that's completely unrealistic isn't it? sad

HSMMaCM Sat 22-Mar-14 16:49:00

Most CMs only have 3 (or less) children during the day and might have after school children. It's a very manageable ratio, but if that's not what you want, then a CM isn't for you.

Smerlin Sat 22-Mar-14 18:32:35

Thanks HSMMaCM - three does sound ok during the day although I understood the maximum for little ones added up to 4? I am also worried about another 3+ after 3pm. I think I'm just worried about her being left out being the littlest one - she won't be able to do arts and crafts, run around the park etc when she joins so how will her needs be met and those of 3 toddlers?

I am very new to this so I expect there is a sensible answer - just can't picture it at the moment!

TheScience Sat 22-Mar-14 18:35:14

3 under 5s of which one can be under 1 is standard.

Smerlin Sat 22-Mar-14 18:40:37

Thanks TheScience - I didn't realise the 3 under 5 included the under one as well

Ktay Sat 22-Mar-14 18:52:26

Round our way (sw London) a nanny works out cheaper than childminder if you have 2 preschoolers. I pay £135 a year for monthly nanny payroll (not nannytax) and I think most are in this region or slightly more.

Would you consider a nanny with own child? That's a bit more flexible than a share and normally works our about 25% or so cheaper.

nannynick Sat 22-Mar-14 19:00:58

NannyTax currently charges £276. Other companies charge from £100. However do look at the services provided and determine which is suitable for you.

A nanny can be a lot higher cost than a childminder, though it may vary depending on area. Generally for care of 1 child a nanny is very costly, even splitting the cost with another family who have 1 child it is still costly, as shares can be more expensive due to nanny having to satisfy the needs of two sets of parents.

Smerlin Sat 22-Mar-14 19:15:47

I have been quoted £6-£7 phn for a share or £9-10 phn for Greater London- does that sound reasonable? Childminders are £6 ph/£50 pd but obviously no tax etc on top so the tax adds maybe 20%?

Smerlin Sat 22-Mar-14 19:16:24

Sorry should say £9-10 phn sole charge

Daveface Sat 22-Mar-14 19:20:33

Following as in similar situation.

nannynick Sat 22-Mar-14 19:29:46

phn (per hour net) is not that helpful as you need to calculate the real cost to you as the employer.

Grossing up is tricky:

60 hours a week at £9phn, taxcode 944L is £41,341 cost to employer (2013/14 tax year), nanny salary £11.91 per hour gross.
30 hours a week at £9phn, taxcode 944L is £17,780 cost to employer (2013/14 tax year), nanny salary £10.58 per hour gross.

Cost to employer in above examples is: Gross salary + Employers NI.
There are other costs you need to consider in addition.

Net to Gross calculations are not something that can be easily done, as the example shows... the resulting hourly salary is quite different, 1.33 different in this case.

So as you wrote earlier, you need to agree a Gross salary. Taxcodes change, they change in April and can change at other times as well depending on an individuals circumstances.

The figures you have been given - how many hours per week are those based on? As you can see above, it makes a difference.

nannynick Sat 22-Mar-14 19:34:07

What does the childminder figure include? It may include food, or it may not. It may include outings, or it may not. They may charge you during times the service is not available (childminder on holiday) or they may not, or they may charge you a percentage of the fee.

A nanny will have additional costs such as:
travel expenses for outings - such as mileage if using their car, public transport tickets.
lunch for nanny during working hours, possibly other meals as well depending on working hours.
activity costs, even baby groups will incur some cost usually.

nannynick Sat 22-Mar-14 19:36:19

What are the hours of care you would need? Example: 7am-7pm, 8am-6pm? Are the hours something a childminder would do?

Where a childminder has a daily rate - how many hours is that for and what if you need more hours?

Smerlin Sat 22-Mar-14 19:41:59

Well I don't mind paying activity costs certainly- I pay these now while on mat leave and would certainly like DD to continue going to groups/swimming etc within reason. Is lunch usually in as in help yourself from fridge or buy a sandwich out type thing? I'm so clueless!

We were looking for 30 hrs a week so your second example is spot on- thanks nannynick !

nannynick Sat 22-Mar-14 19:55:10

Typically it is eat with the children... though that is obviously hard if caring for a baby who is not on solids. It is usually help yourself from the fridge type of thing... cook your own from stuff available.
As a nanny I enjoy baking, so we quite often make cakes, biscuits, cheat and buy puff pastry these days though make short crust pastry.

Costs change as children get older, as you buy less baby food/formula, buy more food that can be made into things that toddler and adults will eat, varying appetite.

As a nanny I quite often have: Scrambled egg with toast and peas, soup, sausages and mash, pasta with some kind of sauce, rice and veg with/out meat of some kind.
Due to my working hours, some days I start after lunch so don't have lunch at work but do have afternoon tea.

It is hard to quantify how much that costs - perhaps look at it as a similar cost to you being at home yourself, as you will no doubt be eating and drinking (coffee/tea/milk/water) whilst at home.
So perhaps cost it as whatever your cost of lunch will be at work... will you be going for the £3 meal deal from the supermarket, or making your own sandwiches, or going to the gourmet cafe?

Smerlin Sat 22-Mar-14 20:03:07

Haha thanks Nannynick - I am a keen cook as is DH so wouldn't be a problem having a stocked fridge! Our own lunches are normally extras we cook the night before tbh!

One last question as you seem to be the guru here if you don't mind. We are looking for term time only as I am a teacher. A few nannies seem to be looking for term time only positions themselves but how does that work with holidays? I know childminders can choose no fee/retainer/full fees for holidays and I know that as I am an employer I have to pay the nanny pro rata holiday pay but does that mean I just pay for 5.6 weeks of the school holidays while nanny not working or are they likely to want to take some of the 5.6 weeks during term time?

TheScience Sat 22-Mar-14 20:15:32

Sounds like a nanny with their own child might be ideal for you.

OutragedFromLeeds Sat 22-Mar-14 20:15:42

I just wanted to correct something from earlier; Oftsed registered nannies can accept childcare vouchers. The vast majority of nannies are Ofsted registered. If they're not it's a simple process.

The cost of being Ofsted registered is �103 per year. IME this cost is met by the employer, although other nannies (namnynick included) have different experiences/views on this.

nannynick Sat 22-Mar-14 20:25:37

Having done term time only myself in the past, I have to say I don't like it as it complicates things. You may find that some nannies won't do a term time only job, others might but may want a higher salary to compensate for not being paid all year.

Issues are often around:
when holiday can be taken
how pay is split - working time or over 12 months
how much paid holiday they get
how much unpaid holiday they are expected to take

I would suggest going on the generous side... so giving at least 6 weeks paid holiday. So if they are doing a 38 week year... then you pay for a 44 week year. What you then do for the other weeks is up to you to agree.

I think the current way of working out minimum holiday is 12.07% of hours worked per year. Wrote this in 2011, think it is still current. Not sure Governement ever rewrote guidance on term time working.

As an example, a nanny working 30 hours per week would be doing 1560 (30x52) hours per year. A nanny working 30 hours per week term time only would be doing 1140 (30x38) hours. Term time weeks may not be 38, it can vary between educational establishments, plus teaching staff may work more weeks than pupils attend.
If a nanny was doing 1560 hours and had 6 weeks paid holiday, then holiday would be 180 hours. If gross hourly pay was £10, then annual salary £15600.
If a nanny was doing 1140 hours and had 6 weeks paid holiday, working hours would need to be increased by 180 hours (6x30) giving 1320 hours. If paid at £10 gross, then £13200.
As you can see, there is a difference in the annual pay... thus why some nannies won't do term time only, at least not at the same hourly salary.

Things can always come up during term time. So even where a nanny agrees to take their holiday outside of term time, there can be occasions where time off is needed. For example a relatives funeral. So you need to come up with a solution for that - which may be that you take a sick day from work, or whatever sort of late notice leave your employer may allow.

nannynick Sat 22-Mar-14 20:31:20

>The cost of being Ofsted registered is £103 per year. IME this cost is met by the employer, although other nannies (namnynick included) have different experiences/views on this.

I often have different views on things grin Would be dull on here if we all agreed with each other all the time smile

There are other costs of being on the Ofsted childcare register - such as public liability insurance, paediatric first aid training, some kind of childcare training/common core. So you may find that some nannies will expect employers to contribute towards that, whilst others will pay for that themselves. So as an employer it is important to establish early on what you expect the nanny to pay for to remain employable.

NomDeClavier Sat 22-Mar-14 20:51:53

I wouldn't say the vast majority if nannies are registered. I've seen estimates that put it around 10% BUT most nannies are in a position to be and many when looking will register to make themselves more employable.

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