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Employing a nanny - anyone not use a payroll company?(18 Posts)
We are going to be employing a nanny and will be paying her tax and NI
We are happy to pay everything we need but wondered is it a real PITA to do it ourselves or let a company do it for us and incur the resulting admin fees
any experiences much appreciated
I do it myself
I have an excel spreadsheet and worked out the formulas and just plugged everything in.
Alternatively, HMRC will send you a CD with your payroll pack and you can enter everything into little tables that they give you (very simple tbh) once you have installed the payroll CD on your computer (and that gives you net pay etc.)
It's more remembering to do it than anything else. I pay my nanny weekly and quite often forget to print the payslips arrghh but other than that, it's been pretty painless.
oh fab - thanks so much
will get in touch with HMRC
they've been pretty helpful when I've called (once I finally sorted out who was my accounts office etc.! Like everywhere, it's getting to speak to the right people).
My nanny has gone on maternity leave and I filled in HMRC's online forms to ask whether they could fund her maternity pay in advance for me (the statutory pay) as otherwise I have to pay her statutory leave plus the new nanny's pay (they do advertise that they do this for small employers, just not very widely!) and I have just received a cheque for all her maternity leave for the 09/10 tax year .
sorry, she hasn't gone on maternity leave but is about to in the next month!
Totally doable, especially if your nanny does not have another job. P49 (PDF, 2.4MB) is handy to read to get an idea of how it works. While it looks complex at first, it's ok once you have done a few payroll runs. Using the employers CD-ROM and using online filing of returns will make it a little easier, then doing it all paper based.
Payslip does not need to be as complex as one you may get from your employer. I have had a previous boss who used a duplicate book to write out a payslip each month... thus generating two payslips - one for me and one for my employers records.
Make sure the salary agreed with the nanny is GROSS Pay... not NET.
Agree to pay the nanny Monthly (you do less payroll runs then).
The first few months runs may take you a while... don't give up... contact the helpline for advice. Once you've cracked it, you will find future months much easier.
I often wonder if there is a demand for an internet payroll service for nanny employers. This would be much easier to use and more comprehensive than the HMRC CD ROM/online filing service (which cannot deal with things like SSP and SMP among other things), would produce payslips and other reports you can print at home or send by email, keep your and your employees' data safe, secure and backed up and cost much less than the payroll agencies.
Any takers at £60 a year?
How about £40?
Any other feedback?
I am intrested how you choose nanny ?What is the most important think you looking for?
If you give me any answer I will appreciate.
MrAnchovy - interesting idea. Would HMRC need to approve the coding? Would it be able to cope with NET pay agreements?
nyuszi - best to start a new message thread... this one is about payroll.
Nick, HMRC would not need to approve it, but it would be better if it achieved certification to The Payroll Standard. Note that HMRC's own CD ROM falls a long way short of this standard (no SSP/SMP for instance).
And yes, it should cope with grossing-up net payments.
And yes, I will be looking for some testers soon!
thank you for more comments/advice
we will pay monthly and see how we go
MrAnchovy - service sounds interesting ...
MrA, I have no idea how much the normal payroll type places charge for small employers.
I don't know many other people who do it themselves other than accountants (like myself!) and I only do it because I quite liked the idea of working out the formulas and getting to the right figures (I know, I know!). Having said that, it's perfectly possible to use that CD and get on ok.
I would say that your only hassle, at that sort of price, would be the dealings with HMRC on behalf of anyone you take on. Things like sorting out how it will work if the nanny has 2 employers. That sort of thing can be quite time consuming.
Would also suggest you look at charging a set fee for end of year tax work (so the P35 return, P60, P11D if necessary) unless you were thinking of including all that in your fee because it all happens at once for all your employees together so ends up taking up a fair amount of time (just the printing etc.).
Thanks for that foxinsocks. The cheapest nanny payroll agency I know of charges £100 a year, the most well-known one is £260.
I don't think a payroll agency service that deals with HMRC on the employers behalf is viable at the sort of price I propose. But I don't think that is what most people need anyway - most of the complaints I have seen about nanny payroll agencies are due to poor communication, so eliminate the communication and you eliminate the problems - I hope!
End of year returns will be electronically filed using the employers own HMRC online filing registration, just like any other payroll software, so no extra work.
Anyway thanks for the input. Did you use the approved HMRC calculations for PAYE with the correct rounding formula at each stage? If not, you may well have some small differences in your calculations (the odd penny of tax is not really significant, but it is easy to get tax free pay out by £1 and so be 22p out in tax). HMRC say that PAYE must either be worked out using the tables or the approved algorithm, other calculations (even if they arrive at a more accurate figure for the tax liability) are not permitted.
even doing that electronic filing can be time consuming though - I'm not talking about huge amounts of time but compared to say running a payslip (seconds!), it's a bit longer than that.
I did my own calcs then compared it back to theirs. Our first nanny, even though we quoted a gross figure, wanted a certain amount net so I worked it out net then put it in backwards iyswim.
Next one was gross pay so that's fine.
I got my return back from HMRC and they were happy with it.
I don't think it's what people need either (the HMRC communication bit) but I think people might expect that you do that as what people want to do is rid their hands of the whole pallava iyswim!
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