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How does the tax work with a part-time Nanny?

(17 Posts)
hanaflower Mon 22-Jun-09 16:45:44

Message withdrawn at poster's request.

limonchik Mon 22-Jun-09 16:55:15

So long as you agree a gross wage with her, it doesn't really matter - it's not the employer that pays the tax, it comes from her wages. You can use a payroll company to do the payroll if you want.

HarrietTheSpy Mon 22-Jun-09 17:05:53

Be careful about this. I see what Limonchik is saying but this is not exactly how it has worked for us. We agreed a gross wage but the other family had to also agree to share her tax relief with us for her to end up with the net amount she wanted. Although we have a gross weekly figure in her contract. I guess she'd complain if the tax laws ever swung against her and she was ending up with considerably less. In reality, I feel like we're operating some sort of half way house between gross and net. I can't explain the situation entirely to you, I'm afraid. But I would consider employing a payroll company to sort this out for you. HOw many hours is the other family employing her?

Loads of threads on why they have to be employees. Very simply - in your home, at the hours you want (she has no choice) on the days you want, doing what you ask her to do, she's an employee. Others will undoubtedly come along and explain it more eloquently than me.

limonchik Mon 22-Jun-09 17:10:14

We really need to move away from thinking/talking in net at all. No other profession do people decide what they want net and work backwards! If you had a part time job in the morning and a pub job in the evenings, neither would have to know anything about the other and they'd be no talk of sharing tax relief.

nannynick Mon 22-Jun-09 17:29:11

The way I see it is how I see it with any other job... the person decides who the main employer is and who the secondary employer is (this can be done via the P45/P46 form) - in your case as secondary employer, your nanny completes a P46 and ticks box C - "I have another job or receive a state or occupational pension."

You then complete payroll according to the taxcode produced by Box C on the P46 initially - and if HMRC send you a tax coding notice, then you use the tax code they supply.

According to P49 you use "BR cumulative". You need to complete PAYE paperwork when using this tax code, irrespective of the amount paid.

To get a feel for how much you will be deducting from your employee in Income Tax and National Insurance, use the site (I have put some sample figures into this link, so you can see how it works. Modify the Weekly Gross Salary box to suit the amount you are paying.)

Will be hiring a Nanny for 18 hrs a week, so over the £100/week tax threshold. The nanny has another part time job too. So, how does the tax work? The way I understand it, the first £x per month is tax free, so there is less tax to pay. But how does this work if there are 2 jobs? Does one employer get stung for all of the 22% rate?

nannynick Mon 22-Jun-09 17:31:46

Opps, should remember to preview, ah well - you get to see your question as well as my answer smile

You only get stung, if you have agreed a NET wage. So make sure you write in the contract that the salary is X amount GROSS per year (or per month, or per week).

hanaflower Mon 22-Jun-09 21:27:38

Message withdrawn at poster's request.

nannynick Mon 22-Jun-09 22:48:30

Why change the rate of pay once registered with Ofsted? Is that something you are agreeing to do... if so, write it very clearly in the contract so you both know what the agreement is... such as from what point following Ofsted registration certificate being available does the new pay start.

hanaflower Mon 22-Jun-09 23:08:06

Message withdrawn at poster's request.

nannynick Mon 22-Jun-09 23:24:28

£8 gross per hour could well be more than she is getting in Nursery, so not at all stingy. It is up to her to decide if she wants to accept the job at that salary level or not.
I would stick at that wage for the first year, regardless of the Ofsted registration status. Then once she has been with you for a year you can review the situation and could offer more money, if you are able to do so.

nannynick Tue 23-Jun-09 19:03:12

For those interested, I have done an example of the PAYE for a nanny with two jobs. See here to save cluttering up Mumsnet.

In my example each employer pays the same gross salary, thus makes comparison easier. The outcome is that the Cost (Gross Salary plus Employers NICs) to each employer is the same. The difference comes in the amount of employees tax deducted on behalf of the nanny and paid to HMRC.

hanaflower Tue 23-Jun-09 21:42:43

Message withdrawn at poster's request.

nannynick Tue 23-Jun-09 22:01:50

You don't need to get insurance, Employers Liability insurance is usually part of your home (contents I think) insurance. Check your home policy/policies.

PAYEforNannies (Currently £115 inc Vat) seems to have a fairly good reputation and are probably cheaper than NannyTax. Do you need the extra services provided by NannyTax... or just the payroll function?
Flying solo is much easier these days, as the Employer CD-ROM includes many tools to help you, plus you do a lot more online. So if you have a Windows based PC (not sure if Employer CD-ROM works on MAC, anyone know?) then worth trying going solo.
Ofsted registration is for your nanny to sort out, not you. I wouldn't suggest you get overly involved in that. Though do consider if you will be paying the registration fee... can be nice perk to offer that to your nanny as an incentive to be registered.
Childcare vouchers do have an expiry date. This may vary by provider, so check with them. Typically I think it is around 12 months.

chandellina Tue 23-Jun-09 22:20:37

just to add one more question to our resident expert here - does holiday pay just pro-rate based on the part-time hours worked? I'm considering employing a nanny for three or four days a week, is there anywhere you could point me that would give me some basic info? thanks!

chandellina Tue 23-Jun-09 22:24:41

ooh, just found your blog, perfect!

nannynick Tue 23-Jun-09 22:37:53

Oh I'm not the resident expert, just one of the many mumsnetters who knows about this kind of stuff. Nice to be called an expert though smile

Best to use the BusinessLink Holiday Calculator to calculate holiday entitlement for part-time staff. It is 5.6 weeks pro-rata, done either as Hours or Days.

hanaflower Fri 26-Jun-09 20:43:05

Message withdrawn at poster's request.

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