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How hard is it to run your own payroll?(8 Posts)
We are hoping to take on a part time nanny. I understand she needs to be employed by us. She will be earning less than £149 a week from us so will be below the tax and NI threshold. How straightforward is it to run your own payroll? I'm reluctant to pay a payroll company if I don't have to, as I won't be earning much more than her and would like to keep the costs down but if I'm tearing my hair out every month, then it may not be worth it. Has anyone done it themselves?
Also, she does other (non-nannying) work on a self-employed basis. Does this affect our tax/NI contributions or is this just something she works out at the end of the tax year, based on what she has already earned from us?
NI lower earnings limit ( for 13-14) is £109 so not sure what the 14-15 limit is but looks like you will be in it & have to operate payroll. Your employees other earnings will impact their tax rates etc & May impact their tax code (as can lots of things about which you have no control / knowledge) so you must agree a gross salary wage otherwise you could end up with very different costs than you expect. In theory it is not that difficult to operate payroll you need to register with HMRC online as an employer issue payslips & report figures to HMRC (& pay over any deductions you do have to make). Complications arise when govt change things at short notice or if you need to apply SMP or SSP. A payroll company gives you access to people who deal with complications all the time but obviously at a cost.
The threshold for reporting to HMRC for 2014/15 is £111pw or £481pcm if paid monthly, but if the employee already has another job (self employed earnings don't count) you must operate PAYE and deduct tax on the whole earnings unless/until HMRC notify you otherwise.
You can DIY - the best free product IMO is BrightPay, HMRC also provide an online service.
As long as you have agreed gross pay, an employees other earnings cannot affect what you pay, although depending on the tax code you may have to deduct tax from the amount paid to the employee and hand it over to HMRC.
I agree with MrAnchovy, it is certainly possible to do your own payroll and software like BrightPay are free for small users (up to 3 employees) and are far more feature rich than PAYE Basic Tools that HMRC offers.
It is TIME that is the factor I feel. It will take you time to get to grips with things, initially it may take a while but once once you have done a few months you will get into the swing of things.
Use the new employer helpline to get yourself started as an employer. Once you have your Employers PAYE Reference and Accounts Office Reference, then you can use software like BrightPay. Watch the tutorials.
I don't think the HMRC online system provides payslips - it might now but it certainly did not in the past. You could use a duplication pad from a stationary shop... writing out a simple payslip, keeping a copy (the duplicate).
Pension scheme starts in a couple of years (it may be 2017 for new small employers registering now. Check Staging Date once you have PAYE Reference Number) Once that starts then you will need a pension scheme, possibly NEST.
When that starts you may need further help, but I expect that may be the case for a lot of small employers, so the Employers Helpline and the payroll software help desk will I presume be able to assist.
HMRC: New Employers - have a look at things like: PAYE the basics, taking on a new employee, making payments to HMRC.
This is all hugely helpful. Thank you, especially for all the links. I will investigate them. You are correct about the HMRC online system not providing payslips - I was investigating this today. I will definitely look into BrightPay as this sounds more comprehensive than the HMRC product.
We will only be needing her until September 2015 as ds will get his free nursery hours and has a guaranteed place then, so I don't think the pension scheme will be in issue for us, but will double check this. Because we have agreed these dates, I presumably need to put her on a fixed term contract.
I use PAYEfornannies, they are much cheaper than nannytax and for an extra £20 per year will provide you with the services of an employment lawyer if you need one. I think that's worthwhile reassurance to have (though my nanny doesn't seem like the litigious type!)
I've always done my own payroll. Offer your nanny a gross salary
First you need to register with HMRC as an employer, it's fairly easy, just go onto Their website
Second, I would use a payroll provider I use a payroll site called thepayrollsite.co.uk.
They can generate pay slips and send payments direct to HMRC as well as sending out your send of year statement.
You don't need to worry about the pensions stuff, as you can defer your staging date until jan 18 if you are a small employer.
Great. Will investigate these as well.
Dp is an employee but also has to fill out a tax return each year - a throwback from when he was self-employed. I'm also an employee but don't do a tax return. We have joint account and deprecate accounts. Are there any implications from this as to who should employ the nanny? Both if us paid from the joint account or one if us individually? I'm not sure whether this matters or not.
Sorry for all the questions. I don't have a nanny agency I can ask as this is a private arrangement.
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