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Confused about nanny pay services

(7 Posts)
lovealatte Tue 18-Apr-17 19:32:57

There seem to be two - nanny tax and nannypaye. My initial impression was that you pay the full salary to them and they pay the nanny but that doesn't seem to be the case on reading their websites - do we still pay the nanny directly and pay the tax and NI to HMRC? How do we know how much to pay the nanny and how much to keep back for tax and NI - do they figure this out for us?
Also - pensions - when do we need to start paying and any idea how much?
Any advice or experience would be really appreciated!

nannynick Tue 18-Apr-17 20:36:52

My initial impression was that you pay the full salary to them and they pay the nanny but that doesn't seem to be the case on reading their websites - do we still pay the nanny directly and pay the tax and NI to HMRC?

NannyTax offers a Plus service where they deduct the money from your bank account and pay it to the nanny and pay HMRC for you but it costs a LOT and they said in a recent webinar that you can't use their Plus service to pay HMRC via Tax-Free Childcare, which means you could be missing out on a good saving.

So how NannyPaye and NannyTax work is that they create your account with HMRC, they produce the payslips which tells you how much to pay to your nanny (you pay your nanny the net pay figure on the payslip), they report the earnings to HMRC, they send you a tax bill once every three months so you can pay HMRC (you pay employers National Insurance plus you pay to HMRC the Income Tax and Employee National Insurance that you have deducted from your nannies gross salary).

How do we know how much to pay the nanny and how much to keep back for tax and NI - do they figure this out for us?

Yes, this is all shown on the payslip and every three months (April, July, October, January) you get details of how much to pay to HMRC.

Also - pensions - when do we need to start paying and any idea how much?

If you start being an employer this month, then auto-enrolment pension won't start until January 2018. If your nanny does not start until July 2017 or later, then auto-enrolment pension would not start until February 2018.

The payroll provider will calculate how much the pension payments will be. There are different methods for calculating the amount due, one is called Qualifying Earnings which means that you only pay pension on the earnings above the lower earnings limit (this figure changes each year). Until April 2018, the employer contribution is 1%, this goes up to 2% on 6th April 2018 and to 3% on 6th April 2019.
You can get a feel for the costs involved by using a pension contribution cost calculator.

I would recommend that you call a payroll provider and talk to them. Ask them your questions. Have you decided how much you will pay a nanny and how many hours per week they work - if so, tell the payroll provider that information and they can do a cost estimate for you.

lovealatte Tue 18-Apr-17 20:54:26

Thanks nanny nick that is so helpful. Yes it sounds like nanny plus isn't really worth it.

StereophonicallyChallenged Tue 18-Apr-17 20:58:08

Try a regular accountant/bookkeeper OP.

A decent local accountant in my area is a lot less for the same service from what I've heard (from parents who have switched from dedicated nanny payroll services.)

Ask about, someone you know will likely recommend a good local one for you smile

nannynick Tue 18-Apr-17 21:14:18

Anyone can do payroll, where the specialists come in is when you need support as a parent in the employment side of having a nanny. Sure you could call ACAS but nanny payroll companies have staff who have employed nannies themselves, who are nannies themselves and specialist staff who are legally trained, so can give you guidance about all matters relating to nannies, not just the payroll. Sometimes you may come home to find your nanny has done something and not know how to handle it, if it is a sack-able offence or not and it can be helpful to talk to someone who has experience of such situations.

Accountancy services be they a local accountant or be they a specialist nanny payroll provider will vary in cost and the level of service you get. So it is important to shop around... do give providers a call and have a chat, see if you get on best with, see who helps you.

wickerlampshade Fri 21-Apr-17 21:16:01

payefornannies are much cheaper than any of the others and they are excellent - handled various tricky issues for me. When it turned out that I was going to finish having a nanny a couple of months after my membership ran out they extended it for free for me.

CaptainBraandPants Fri 21-Apr-17 21:18:40

I use Way2paye - when I looked they were very competitive. This was seven years ago, but we still use them and they are excellent. They were really helpful when we had to set up the pension late last year.

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