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PAYE and NI for nanny share- HELP PLEASE!

(8 Posts)
MamaMicah Wed 11-Nov-15 12:35:16

I am having a headache with paying tax and national insurance for the nanny I share with a friend. My friend is the main employer, the children are all cared for in her home with the nanny providing wrap-around care 5 days a week for my friend's 2 children. She then cares for my daughter for 4 hours a week, after school on one day, term time only.

The financial arrangement is that I pay the nanny an additional 50% of her net salary for the hours when she has my daughter. (I also pay an agreed amount to the kitty to cover any outings, food etc.)

I am using childcare vouchers to pay my nanny who is registered with OFSTED.

Previously my friend paid all the PAYE and NI, which she does through Nanny Tax and I then simply paid her the cost of the additional hours' tax and paid the nanny net.

However HMRC have told me I need to register as a separate employer but I then have to pay the nanny the minimum wage. That makes no sense to me whatsoever. I cannot believe that nanny shares out there are each paying the nanny the minimum wage.

So any advice please!

Cindy34 Wed 11-Nov-15 13:02:01

NMW is an issue in nanny shares when each family is a separate employer.

Did HMRC contact you to tell you that they were not happy with your arrangement?

What are the gross figures involved - how much does the nanny get from you Gross per week?

Given care is provided at the other families home, are you contributing to costs of that shared space? You mention kitty but not things like heating, lighting, food, rent, council tax, water and sewage... this list is getting long but you get the idea.

Could you perhaps increase the gross you pay, your friend reduces the gross they pay, so each of you is paying NMW for those 4 hours.

Cindy34 Wed 11-Nov-15 13:07:34

What have NannyTax said? You only want 152 hours of care a year, or around that depending on length of school terms, so I think being joint employers would be better cost wise but is it legal to do?
As separate employers you get the benefit of a saving in National Insurance but as you say there are issues over NMW, though would the nanny really report you for failing to pay NMW?

MamaMicah Wed 11-Nov-15 14:12:12

Thanks for feedback. My friend was advised by NannyTax that we needed to be registered separately, I have not been contacted by HMRC, I contacted them. I know my nanny would not make any complaints about NMW because she is taking home 50% more for those hours and bless her, she is blissfully ignorant about financial matters, all the more reason for me to make sure I get it right.

The trouble is I don't pay gross, I pay net. The arrangement I have with my friend is that I pay the nanny £4 per hour (half the rate she pays the nanny) and she took care of the tax and NI through NannyTax and simply told me what my contribution was. It acted as a good way to help her keep her nanny once the children started school since it gave the nanny a bit more money coming in (although not a lot obviously!)

MamaMicah Wed 11-Nov-15 14:13:10

How do we go about being joint employees? HMRC weren't very helpful in discussing options!

ItsAllGoingToBeFine Wed 11-Nov-15 14:15:58

Is this any help?
www.taxingnannies.co.uk/nanny_shares_tax.php

nannynick Wed 11-Nov-15 18:34:00

Joint employers should be possible by changing the contract. As Cindy says, you won't get the NI saving but you don't have minimum wage issue.

How much are you paying in total (pay to nanny plus your contribution to taxes)?

If you were an employer in your own right then there is likely to not be any National Insurance or Employers NI but there would in income tax as the nannies taxcode is likely to be BR.
Is the nanny very young, or are they at top of NMW amount? Are they 25 or over, as that will make a difference once Living Wage starts.

MamaMicah Thu 12-Nov-15 21:52:58

That's all very helpful. Thank you. The article on taxingnannies is great. Just what I needed. And yes we do need to watch out for the living wage.

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