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calling employment experts - is there any way a nanny can be self employed?(40 Posts)
i'm currently looking for an after school/holiday nanny to start in september. there is one candidate who is ideal, works in a school, current CRB, driver, outstanding refs from previous families. she is head and shoulders above other candidates i've seen so far.
the only wrinkle is she wants to be paid cash in hand. i'm uncomfortable about this - i want everything to be above board. i can't afford to gross up the pay so that she gets the amount she wants net, iyswim.
given that she has a number of jobs and her daughter (who is also a qualified nanny) could substitute for her if need be is there a way of structuring the t&c/contract so that it stands up as self-employment?
i have looked at HMRC Leaflet IR 56 (Employed or Self Employed?) which from the title you'd think could answer the question (lol! ) but i think it is a borderline case.
any advice very much appreciated.
thanks in advance
if a nanny does not call her self a nanny, but an 'in home childcare consultant' or similar then it can work...
its not supposed to, but when shes declared self employed, states that as her occupation it seems to be the type of thing that inland rev dont pick up on.
You can also be self employed if you work for lots of different families (more than 2 i think)
BK - I don't think so, there was a loophole whereby a domestic servant could be self employed but it was explicity closed in teh 2003 finance act.
thank you, nannyl and soapbox. i thought as much!
i wonder how many people pay their nannies cash in hand?
I cannot professionally give you any advice on this, but if we were talking about a hypothetical situation such as the one you have described:
Certainly the fact that she can supply a substitute would be seen as a very significant indicator of self-employment. If this substitution actually happens in practice (and I would recommend that you keep records of when this does occur), and she has other clients, then you've probably got a decent chance of coming up with a contract that would indicate self-employment.
The contract will be the first thing that the Revenue would look for, but wouldn't by itself be decisive - the Revenue would also look at other factors (eg the substitution and the other clients).
Contractually the contract would be closer to that of a childminder/nursery rather than a nanny. You would still be able to set minimum standards of behaviour required, and would probably have a clause stipulating that you get to interview and approve all substitutions. Holiday pay, sick pay etc wouldn't be applicable, and you might want to set out say either a minimum or avergae number of hours that are to be worked over a suitable period. Notice periods are still applicable.
BK - thats a hard call
I've a friend who did who ended up getting heavily fined, not pleasant.
She had had a nanny in the past who they had paid taxes for and so they investigated why she wasn't using one any more. I think if you had never paid tax and NI then chances of being caught out would be less. However, if nanny is clamining any benefits at all, I would definately not take the risk, as she could be looked more closely at if believed to be working.
Now Ladymuck's advice seems to be much more promising - hypothetically of course
Just to say that the FA 2003 changes related to those who were paying their nanny through a limited company, which if I understand it correctly isn't what is envisaged here? This legislation prevents the use of a limited company solely to convert from an employed to effectively a self-employed status (at least for the employer).
In the situation that BK is setting out, there are other factors which could indicate self-employment. In particular it is very unusual for a nanny to be able to send a substitute which is a significant factor as to whether someone is an employee or not (My employer would be very upset if I sent someone else in my place!).
thank you, ladies
ladymuck, where would you recommend i go to get proper professional advice on this? i don't want to approach the IR helpline for obvious reasons...
Ladymuck, that is right - as an accountant that is the route that we would have seen people taking as a loophole.
As you say BK's situation is different, with multiple employers.
One of the tests for self employment is that the self-employed person is able to set their own hours, and also that tools and equipment are supplied by them.
So she must set her hours by negotiation with you, and it would help if she provided some toys/educational equpiment (and claimed for them as allowable expenses against her earnings, as my childminder does).
If she does not declare any earnings (in other words, she doesn't tell the IR that she is self employed) then at a later stage you WOULD become liable to pay tax and NI on what you paid her. If you go down that route, make sure she shows you the letters the IR send her, confirming that she has registered with them as self-empolyed.
It CAN work, but you and she must trust each other, and ensure that the official paperwork is spot on.
Just to say that I do not, and never have, worked for the Revenue.
But I probably would phone the IR helpline.
I would probably phrase it that you have been looking for part-time childcare, and have been offered childcare by someone who also offers the same service to another family/other families. I would mention that she is stating that she is self-employed and under her terms and conditions she can supply a substitute care-provider (which you are happy with). Then I would ask whether there was anything further that you needed to do. Usually these calls are on a fairly anonymous basis, especially if you indicate that you are just looking at the possibility of entering into a contract. But obvilusy do keep your own records of the conversation!
Otherwise, I'm afraid I'm not sure who to recommend. If you look for a local Chartered Tax Adviser I'm sure that you should get some sound advice. HTH
bk - no idea on teh legal positiopn I'm afraid, but I did have reason to call the IR helpline about a "hypothetical" situation regarding my G'ma's estate, and they were happy to give out information without asking for any identifying information. Of course, getting through to anybody who could actually answer questions any better than the muddles wording of the official booklet was a totally different matter....
I'm very interested to know the outcome of this thread, so will be watching closley.
Certainly I believe that a nanny can never be self-employed, as they do not meet all the requirements of self employment. Certainly they could meet some of the requirements, but surely never all of them.
With most nannies, there is no possibility of them employing someone else to the job for them... boosykate seems to have this option, though bossykate, are you going to be interviewing both the nannies? After all, you don't want to leave your children with someone you and your children haven't met and know very little about.
thank you everyone there is a lot of food for thought here.
jothorpe, i'll assume your penultimate paragraph was well meant so won't comment.
is £10 per hour (gross) for this sort of work reasonable? it seems to be based on when i asked on mn before.
Rate wise I pay £8ph (gross) during the week and £9ph at the weekend. I'm at the Southern end of South London. But this is the standard rates applied by the local agency and I pay them £10 a day on top. I generally use a nanny for either one or exceptionally 2 days a week. Through the agency I have the choice of 2 nannies (both of whom have been with us for over a year now).
Both of my nannies are self-employed. The status comes down to the specifics of each case.
When i was thinking of returning back to work as a nanny after giving birth i spoke to nanny tax about if you could be self emlpoyed and the answer was no. You could give them a ring or may be it would tell you on there website www.nannytax.co.uk. Hope this helps
But bear in mind that Nannytax basically sell payroll services (which you don't need if you use a self-employed nanny!). That said it is definitely the norm for nannies to be employees rather than be self-employed, and you must have some distinguishing aspect to be the latter.
i read in the paper VERY recently (like the last month or so) that anyone caught paying nannies or similar would be subject to hefty fines.... (i think they mentioned £3000!
a nanny CAN be self employed!! Call ACAS, they will help.
Not easy thing though
i just realise i meant paying their nannies CASH IN HAND!!!!! (not paying their nannies full stop!)
I am self employed as a nanny but i do temp nanny jobs and maternity positions, if employed by the same family for 6 months or more then i couldn't be self employed.
The IR helpline or your local tax office will help you.
And i use the word nanny in my business name, with no problem.
thanks for all the advice
i will speak to the nanny again when she is back from holiday and press her a bit more on the issue - including her employment status for the other jobs she does.
depending on how that goes, i will talk to the ir helpline. i think it could work as self employment if she plays ball - but i'm not particularly optimistic on that score.
i am working on the assumption that we won't get a solution that is acceptable to both parties therefore i am continuing to search for other candidates.
thanks very much for your help
BK - have you tried advertising in Simply Childcare?? It really is very good and you do get a variety of people with different types of experience not of all whom expect the earth
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