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Nanny Share - other family won't split tax code?(31 Posts)
Advice needed! Basic question - do people doing a nanny share let each other know how much they are paying and if it is net or gross? seems like private info but how can I figure out my tax situation without knowing what the other family is doing?
Full story: We are very relieved to be starting with a wonderful nanny soon (our first time using a nanny). She'll be doing 50% of the week with us and reducing her time with another family she has worked with for about a year from full time to 50% with them. She asked us for 10 pounds net/hour. We signed up to Nannytax and they told us she needs to give them permission to split the tax code so that we aren't stuck with a huge bill.
She said today that the other family wants to do the tax separately. I'm not really sure what that means but I think it means they don't want to split the tax. Or maybe they have a gross agreement? I'm not sure what to do because while we can afford a nanny, it seems very unfair (and expensive!!!) for us to be stuck paying all/most of her tax.
Am I missing something? Nanny is super lovely and we want this to work out :-)
I think you need to communicate with them directly - could it have been lost in translation via the nanny?
That could definitely be the case. Nannytax said it is up to the nanny, not the family, to decide if she wants her taxcode to be split, so I have hesitated to contact the other family. ....Also when we first heard about the nanny I briefly spoke to the father in the other family and he was super business like and clearly didn't want to talk details with me - he emphasized that although he was happy to help her find other work, that our arrangement was our own business.
I guess I'm just not sure how much is the normal amount of information nanny share families provide to each other? I don't want to be nosey but I want this arrangement to go smoothly.
It sounds like they want to "keep" all the tax free allowance and you'll have to pay tax on every pound you pay her. Very unfair but I've heard of it a few times. It's up to the nanny but she probably doesn't want to piss the original family off
From what you say, this isn't a nanny share. She is just a nanny with two jobs (if I've understood correctly). It's up to an employee how she splits her tax code and highlights why salaries should be offered gross not nett.
Work out what it is gross that you can afford and leave her to negotiate the rest.
Agree it is up to the nanny. She just needs to phone HMRC and ask to split her code between you 50:50. Takes about a week for the new ones to come through IME
The problem is that you are agreeing a Net salary.
What you ideally want to do is to agree a gross salary and then not have to worry about tax code changes. Your nanny though won't get £10 net per hour.
If family A will still be paying over £11,000 a year, then you as the second employer will end up not being able to use any of your nanny's personal tax allowance. So with a net pay agreement your costs will be high.
NannyTax are right to say that the nanny needs to agree to split their tax allowance between their jobs. HMRC would then need to also agree to doing that - which they might not do, if one job is paying £11k or more.
What gross pay amount can you afford - would it ever get anywhere close to what the nanny wants to earn?
You need to agree a gross amount. It's up to both the nanny & HMRC as to whether the tax code is split.
Her tax code could change for a myriad of other reasons too hence the importance of gross.
Thank you for these helpful replies.
Any tips to getting nanny to agree to gross? She is very experienced (15 years) and professional (yay!) so she seemed to be very certain of exactly what she wants (more so than me because I'm new to this, so I just said yes - whoops). Perhaps we could calculate the gross in such a way that she is taking home 10 pounds an hour? That is what she wants to make.
She is going to work about 22 hours a week for us and 22 hours a week for them. I believe that means just over 11,000 pounds a year for both families...
I'll try to get her to agree to gross, but would she still need to split the tax code then? I'm worried that the other family might have told her not to split her tax code. She obviously likes them and has been working with them for over a year already, so I imagine they hold some sway for her.
It's up to her what she does with her tax affairs, it's not your business. It's not a nanny share either, she has two jobs.
If you had one job during the week and another job at the weekends, you wouldn't expect your two employers to need to organise anything between themselves, would you?
You need to offer a gross wage and deduct her tax according to her tax code.
I just used the Nannytax Net to Gross calculator and it looks like instead of 10 pounds net/hour it would be 10.63 gross (based on 22 hours a week, so instead of 220 net it would be 234 gross per week).
Does that sound right?
Depends on her tax code. If she uses all her personal allowance in her first job then her second job would be at basic rate I think.
Texas, don't feel bad. It's a while since we had a Nanny but it is very common for pay to be discussed as net rather than gross. Used to annoy me as every other field (including me) gets paid gross. No idea why Nannies should be any different. However there was such a shortage of good ones they rather had you over a barrel.
thank you Catanddogmake6 - This is all a bit overwhelming! Hard enough to leave my son and start a new job. I want to do the right thing for the nanny and do everything above ground (makes me cross when I hear about how people take advantage of nannies!) but I also don't want to end up with all the tax burden.... seems a bit unreasonable.
I would draw up a contract with a covering letter which states that the agreed net salary of £10 per hour assumes a standard tax code of 1100L & will be converted in the contract to a gross rate of whatever it works out as.
>Perhaps we could calculate the gross in such a way that she is taking home 10 pounds an hour?
If you did that, it would be no different to the current situation, as you would use code BR.
So £10 net, tax code BR, 22 hours per week
£220 net per week. 2016/17 tax year.
Gross salary: £13.46 per hour / £296.18 per week.
If you had all the personal allowance (like Family A does)
£10 net, tax code 1100L, 22 hours per week
£220 net per week. 2016/17 tax year
Gross salary: £10.63 per hour / £233.96 per week.
Perhaps you could try to negotiate a gross salary based on what would be the situation if she did split tax code 50/50.
£10 net, tax code 550L, 22 hours per week
£220 net per week. 2016/17 tax year
Gross salary: £12.05 per hour / £265.07 per week.
Perhaps better to just agree on a simple £12 gross per hour, or £12.50 and see if your nanny would accept that.
Are you actually signed up with NannyTax? Can they not tell you what you should be doing in this situation?
Family A won't want her to split her tax code as they probably have a net pay agreement with her and a tax code change will change their costs.
It is fine for one job to be on 1100L and another to be on BR, as long as the first job is paying over £11,000 as it then uses up the personal tax allowance.
when you draw up your contract, ask mners for advice re how to word duties, hours, overtime, use of your home , visitors, your permission necessary for other than listed activities and duties, discipline methods , food,notice of dismissal,holidays for her and you,what you expect to be done when you are on holiday and she is not,etc etc
Nick is right - agree a gross salary. That is where the problem lies. Play around with a net to gross calculator until you are happy.
I have always found it a complete anomaly that nannies expect to have the progressive nature of the tax system smoothed out for them. Your own employer won't be paying you in such a way, why should you do so for her?
Nannynick thank you for those calculations!
I'm going to call Nannytax this morning. They were closed last night when I heard back from the nanny.
We will do our best to get her to agree to a gross salary, now that I better understand the situation.
Your nanny may agree a gross salary equal to what £10 net per hour would be now (so at the BR calculation) but is that affordable?
I manage all the tax for my nanny including for her other family. This is after being stung massively on tax as a previous employer hadn't done her P45 so she legally had 3 employees! I got a refund though.
I pay the Paye for nannies cost and the other family seem mainly grateful that I organise it.
Yes, that nannies are in the main blissfully unaware of tax issues is slightly irritating!
Can you contact the other family and discuss working together?
As others said this is not a share. It is two seperate jobs
You need to discuss a gross salary so that you don't end up paying more
Years ago nannies always got paid in nett. Around 7yrs ago started to be talked about more in gross
Many more experienced
professional nannies talk gross. I have for years 'polishs halo'
Never heard of two employers disgussing wages before with each other
A gross wage solved all of this
Ps find nanny tax crap and exspensive
Try nannypaye instead
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