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Paying a nanny without using a payroll company(6 Posts)
Hi, I employ my neighbour as a part-time nanny to my pre-school children. I currently go through a nanny payroll company to pay her on a monthly basis - she pays no NI or tax on her monthly wages (she is 65 and earns approximately £10k per year). I will need to pay another annual subscription fee for their services from september. As I pay her the same each month and they only provide a payslip and a reminder about paying my employer's NI, I wondered if I could move to just paying her the set amount I pay each month and pay hmrc my NI contribution directly, without having to do anything else? Would I need to contact hmrc to set something else up to facilitate this?
I'd appreciate any guidance!
I use a free online company to do payroll (not for a nanny but for paying low wages from small company). If you google "payroo" they should come up.
It generates payslips, P60s etc. and sends electronic reports to HMRC for all the monthly and end of year reporting and tells you how much employer's NI you need to pay.
I found it quite easy to set up and use without any prior experience of payroll. I was paying an accountant to do this beforehand and saved £££ working out how to do it myself.
I'm not sure if your current payroll provider will have them or you as the employer? If you aren't already registered as an employer you will need to contact HMRC to arrange this, but they have lots on their website about how to do this online, and they are actually quite helpful on the phone too. If thats all you are paying your nanny it should be straight forward, no need for employers pension/student loan deductions. You can just set up a payroll account, do monthly payslip and HMRC report, then do a bank transfer for the wages and employers NI.
The only thing I would warn is you need to be organised. There are fines for late reporting to HMRC, although the one time I was late I was automatically prompted to provide a reason (bank holiday) and seem to have avoided a fine.
Fab. Thank you! I'll look into this and make sure I set reminders everywhere!
Her age could be important. I think she is eligible to cĺaim state pension. She may have deferred it (not claimed yet). When she does claim it, the pension payment counts towards taxable pay. So at some point you may find that her income tax and Nl increase.
The main reason not to do it yourself is the hassle factor. Can you be bothered to do it - is it worth your time learning how to do it, spending time on the phone to HMRC to resolve any issues.
How much is your time worth? Only you can decide that. A payroll provider costs around £15 per month.
What if you got a different nanny in future - you are likely to then have the added hassle of providing a pension scheme (you may need to provide this for your current nanny soon. Although they are too old to be automatically enroled, you still need to have a scheme in place).
HMRC have said that they are no longer developing HMRC Basic Tools, so it will be phased out at some point. So you will need to use commercial software - it maybe low cost or even free for just one employee.
General help about anything to do with having a nanny - your current payroll provider may provide you with phone and/or email support. They may have specialist access to employment lawyers. You may never use those services but you might.
It is certainly possible to do it yourself. Only you can decide if you want the hassle or if you would rather pay someone else to do that for you.
Thanks nannynick. I will have a good think about all of this. Really appreciate you sharing your thoughts and experience x
I'm using brightpay which is completely free for employers with less than 3 employees and is quite user friendly (with free advice for employers as well)
Yes at the beginning you have to spend a bit of time setting yourself up with hmrc and trying to understand the things that need to be done but now I find it quite easy, I just put a reminder on my phone and so far haven't missed a deadline.
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