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Part-time nanny with another job: how to work out net and gross?(6 Posts)
I'm looking to take on a nanny for 2 days per week who already has another job separately for 3 days a week where she nets £50 per day. This costs her other employer £60 with tax and NI all in. However, because the income she would get working for me takes her over the tax and NI thresholds, for her to get £50 net from me would cost me £70 a day. This doesnt seem fair to me (or affordable!) Does anyone know whether there is a "done thing" in this situation? Or is this not actually my problem (ie I just pay her £60 gross too and nannypaye or whoever end up delivering the bad news to her in her payslip.....)
I think you would have to get her other employer to agree to splitting the tax 50/50, but I don't know if they will be willing. AFter all, what is their incentive? You could pay her gross instead of net. In other words, you pay her say £50, and the taxes come out of her pay not your pocket.
She should be able to split her tax allowance between her 2 (or more) employers (2 of my staff do this)
It only takes a phone call from her to the Tax Office
Pending if nannys employers are prepared to split the taxes &/or nanny wants net salary.
If her 1st employer is not prepared to share the tax allowance or does nanny give permission, 1st emplyer will receive all nannies tax allowance, if there is any left you will receive it & Mr Taxman will come along with an additional 22% on nannies gross salary for you to meet. www.nannytax.co.uk
Thanks for all this and you were right that the info was on nannytax. I've pasted it here for anyone who reads this thread with the same question.
"If two families employ a nanny to look after all their children - i.e. a nannyshare - it is advisable for each family to set up their own separate PAYE scheme as this will result in a considerable saving in National Insurance Contributions (NICs) for each party - without adversely affecting the nanny.
Usually, the first (or main) employer applies the nanny's full personal tax-free allowance (currently £94 per week for a single person on a standard tax code) as well as the lower rate (10%) tax band to a part of the wage. The second employer then applies the basic rate of income tax (currently 22% of gross income) to all earnings in their employment.
But many domestic employers agree a net salary with their nanny. This means that if a first (or main) employer is using all of their nanny's personal tax free allowance, the second employer, paying an agreed net, will end up paying substantially more tax, having to pay basic rate tax (at 22%) from the first penny nanny earns.
Therefore all employers are advised to agree their nanny's pay on a gross basis. Even if a nanny takes home proportionally more from her first employer than her second, she should be made aware that she is being taxed correctly, if unequally, over both sources of income. Neither employer is out of pocket when paying an agreed gross wage.
Agreeing a net wage is highly inadvisable as it makes an employer liable to potentially unlimited amounts of top-up tax and NI whenever the rates for these are increased, and severely disadvantages a second employer when the first employer is already applying a nanny's full tax code.
Even when a fixed net wage has been agreed it is better for one employer to use their nanny's entire tax code and to privately agree an adjustment in total cost between the first and second employer, to ensure that neither is unfairly out of pocket, when paying the share of both tax and NI, rather than to apply to the tax office to split her tax code. It is possible for two employers to split their nanny's tax code between them so that each family has the benefit of part of nanny's personal tax-free allowance. But tax code splits are an inadvisable way of balancing pay between two jobs, as they require the prior consent of both employers and their nanny, can involve considerable delays to be authorised by the Inland Revenue and are normally not applicable retrospectively. "
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