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Informal nanny share - handling income from other family

(11 Posts)
OrangeSunset Wed 24-Aug-16 11:38:37

Not sure whether to post this here on on Freelance, but I know there's some folk with good knowledge of tax etc so thought I'd give it a whirl.

We employ a nanny, contract and payroll in place etc. We're going to be sharing one day a week with another family. The Nanny will have an uplift in rate for those days (covered in contract as bonus) and will be paid accordingly.
The other family will pay me for their share of the wage. I'm currently freelance, and so undergo Self Assessment for this year. How should I handle the funds received from the other family? I don't view it as income per se, I'm just acting as the channel for the family to pay the nanny. Though I appreciate this is not necessarily correct in the eyes of HMRC! Anyone with any experience of this?
Thanks

ImperialBlether Wed 24-Aug-16 11:40:00

You need to employ her for X days a week and the other family needs to employ her for 1 day per week. They need to pay her, not you. They are employing her for that day, not you.

doctoratsea Wed 24-Aug-16 11:47:04

To clarify "nanny share" you have shared time (i.e.both sets of kids at same time on one day?)

This being the case you will have to 'aggregate her eranings' as other family employees on same day also, as you are clearly a "business in association" by sharing the employee - for HMRC reference see www.gov.uk/guidance/what-to-do-if-your-employee-has-more-than-1-job

Operating payroll this way is complex and most payroll software cannot manage it. HMRC normally advise that this can be treated as one employment. Call them on 0300 200 3200

OrangeSunset Wed 24-Aug-16 11:48:26

Sorry, my original post wasn't clear.
On one day, the nanny will be looking after children from both families. So we'll share the hourly rate for that day (usual rate + bonus) 50/50.

doctoratsea Wed 24-Aug-16 11:51:04

p.s the aggregration is fo NIC purposes as the tax free allowance takes care of income tax. Otherwise one day employer will not pay any NIC due to NIC thresholds.

To balance this of course, if employment is not at same time, i.e 4 days you and 5th day someone else, then it should be operated as two individual employers.

If you don't want to pay any NI, get yourself 5 unrelated one day jobs under £112 per day grin

doctoratsea Wed 24-Aug-16 11:55:11

OP - my original post would concur.

OrangeSunset Thu 25-Aug-16 14:35:44

Ok, so the nanny only does just over 6 hours per week, and is under the NIC threshold. I'm going to have to ring HMRC, aren't I. Not my forte brew

nannynick Fri 26-Aug-16 08:35:58

Do you use a nanny payroll provider? I would call them for advice.

OrangeSunset Thu 01-Sep-16 13:12:18

Sorry, just seen this.
No, I use Brightpay and find it really easy. No use in this instance tho!

Cindy34 Thu 01-Sep-16 19:16:41

How about doing this:

You pay your nanny as you are now but reduce the pay for the shared hours. So if you paid £10 per hour when just caring for your children but £14 per hour when shared, then you would reduce to £7 for the shared hours.
Then the other family contact a payroll provider (so they get advice as well as payroll function - or would you teach them how to use Brightpay?) and just pay the shared rate. They would need a contract with your nanny, plus you and them should have a formal agreement between you with regard to things like what happens if a family wants to leave the share arrangement, what if one family goes on holiday but the other does not, who provides what equipment, who provides food etc.

I would make sure all salary is discussed as Gross, so any tax code changes don't affect your overall cost.

KP86 Thu 01-Sep-16 19:26:26

Good grief, I'd just keep quiet and take the cash from the other family. Assuming you aren't going to be more out of pocket for payroll tax/NI etc. due to the higher wage on day 5?

Does family #2 want to claim tax credits? If not, then keep it informal.

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