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Confused about nanny pay services

(22 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.

Shezza71 Sat 29-Apr-17 10:40:43

Lots of nanny payroll companies out there, they will help you work out your nannies gross salary for the year and provide weekly/monthly payslips. You pay the nanny the net amount directly and payroll will let you know quarterly what tax and ni to pay. This will be slightly more than the gross pay as there will also be employers tax and in to pay, probably worth putting this aside monthly ready to pay

San212 Sun 07-May-17 23:08:37

Hi . Basically I am hiring a nanny through agency. Where they will pay the nanny themselves minimum wage when they are charging me £8 hour. I think it works by commission.

Would I have to pay additional costs such as tax and NI for the nanny or the agency ?

Thanks

Shezza71 Mon 08-May-17 09:49:40

I'm not sure how it works when the agency places and pays the nanny, thought that was more if using a babysitting agency.
My experience as a nanny is that the agency introduces nannies to families. The family then decide who they wish to hire, pay the the agency a placement fee then use a payroll agency to take care of the tax and NI.
Is it a temporary nanny you've hired, and is she young/inexperienced. She may not stay long if she only receives minimum wage. Depending on where you are nannies generally take anything from £8-£12 net per hour

San212 Mon 08-May-17 12:52:23

I wonder if anyone else knows ? And the pay rate is minimum wage in West Yorkshire. Babysitters are happy with this wage we asked the agency.

San212 Mon 08-May-17 12:52:57

Yes she is 18 and has 1 year experience

nannynick Mon 08-May-17 12:58:21

San212, you need to ask the agency. It is an unusual arrangement, usually you would be responsible for tax, in and employers ni payments.
Perhaps the agency are doing the payroll for you and have included all those costs but you need to check with them.

Shezza71 Mon 08-May-17 13:19:02

Don't call your nanny a babysitter lol
Definitely check with agency as very unusual for them to pay the nanny. She should be your employee and have a contract directly with you

San212 Tue 09-May-17 17:37:51

Got it clear. It was me I was paying my nanny with the agency taking 8%. smile

nannynick Tue 09-May-17 22:18:56

So does that mean you are responsible for paying the taxes San212?

San212 Tue 09-May-17 22:54:37

Yea

nannynick Wed 10-May-17 07:52:42

A nanny payroll provider will be able to help you with payslip production, contract and answering general questions you may have about employing a nanny.
Give a couple a call, NannyPaye and NannyTax are the largest providers.

San212 Wed 10-May-17 07:57:05

Ok thanks I will do. Is it generally worth it paying 10.99 a month for agency ? And then paying 5 to 8 % of whatever I pay to nanny ? Just wondering if it's better to find someone my self

nannynick Wed 10-May-17 16:09:24

Payroll is time consuming. Once you have got to grips with it then you will find it quicker to do. So depends if you want to spend the time learning or not. Payroll providers remove the hassle from busy parents. Only you can decide if the admin fee is worth it to you.

Paying money each month to a nanny agency as a finders fee seems unusual. They usually have a one off fee for finding a nanny - which can be several hundred to several thousand.

You may be able to find someone yourself using sites like nannyjob and childcare.co.uk

San212 Wed 10-May-17 20:51:32

Hmm okay and it covers in case I need an emergency nanny.

TerrysNo3 Wed 17-May-17 11:02:00

I use BrightPay which is free if and do it myself, it takes an hour or so to set up plus generating your HMRC details can take a little while as you have to wait for codes in the post. But if you already have an online HMRC account then you can use this.

Thereafter it takes me a couple of mins once a month to press generate payslip button and send report to HMRC button. I then have to go into our online banking and pay our nanny directly. Every 3 months I make a payment to HMRC.

Someone on MN pointed it out to me and I have done it ever since.

www.brightpay.co.uk/

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