Active discussions

Please or to access all these features

Talk
Paid childcare

Discuss everything related to paid childcare here, including childminders, nannies, nurseries and au pairs.

Original poster

69% of nannies still have a Net pay contract - how can we change this?

58 replies

nannynick · 03/02/2011 14:04

Was chatting with @NurseryWorld magazine on Twitter and they said that their recent survey found that 69% of nannies were on Net pay.

Parents visiting Mumsnet will know from reading on here that it is recommended that nannies are paid Gross, as then tax calculations can be done and there are no sudden shocks if the nannies tax code changes.

Do you think that Nanny Agencies are part of the problem - in that many agencies still list jobs as Net?

How can this be changed? Should it be changed - as a parent, nanny, or as an agency, do you feel nannies should be paid Gross or Net?

OP posts:
Are your children’s vaccines up to date?
Set a reminder
Original poster
nannynick · 03/02/2011 17:05

Yes, I know that makes a change... I'm just not sure it's right as yet. Waiting for MrAnchovy to confirm the calculator will do 2011/12 tax year.

OP posts:
SnapFrakkleAndPop · 03/02/2011 17:00

Calculator will show changes, nick.

Change the tax code box from 647L to 747L :)

Original poster
nannynick · 03/02/2011 16:47

If this system were to change it would either take forever or require something major like a change in the law because I just never come across gross.

PAYE already requires that employers use Gross pay, doesn't it? MrAnchovy - is there tax law which says anything about salaries being Gross and then tax/ni deducted, rather than Net with tax/ni added on?

No change in laws needed in my view. Would be no point in having legislation specifically for nannies in my view... just complicates things and causes delays.

Samedi - have you ever had any other job? Try to think back as to when you first heard about Net wages. I expect it's either via an Agency, another nanny, or a employer/parent.

OP posts:
Original poster
nannynick · 03/02/2011 16:42

If you say worked 50 hours a week and wanted £500 net, then that's £10 per hour net.

With tax code of 647L that's £13.42 per hour Gross. (Net to Gross calculation thanks to KISTAX.com) Your annual Gross salary would be £34,997 This is getting close to the Higher Rate tax - see Rates: Income Tax Your Net pay is £26,071

In 2011/12 tax year, the personal tax allowance increases to £7475 (was £6475). I don't think the tax calculator does this yet but as this change is £1000 that is quite a lot of income which becomes non-taxable. What difference does this make... well MrAnchovy did an example in this message thread where the difference was 2.75% Perhaps he will spot his name being mentioned Smile and do a nice tax table for us.

2.75% may sound small. It is quite small but every penny counts and by agreeing a Net wage, you are in effect lowering your salary come April 2011 - as your Gross salary will drop, as it needs to keep the same Net salary. (Hope I've worked this out right)

So by agreeing a Net contract, I feel you are losing a couple of hundred pounds of salary, due to the change in personal tax allowance. Will be interesting to see what the actual figure is based on the figures I've used above.

OP posts:
SnapFrakkleAndPop · 03/02/2011 14:59

Net/gross calculator

You're looking at £600-670gross to get roughly the net pay you want, assuming a normal tax code and no student loan.

However if you signed a net pay contract tomorrow with a figure of £500net you would lose out on the increase in the personal allowance which comes in April. If you signed a contract with £670gross (current equivalent) you would benefit from the increase.

Samedi · 03/02/2011 14:40

As a nanny currently jobhunting, I've very, very rarely seen a job advertised as gross- maybe two or three times in the 6 years I've been nannying! I have no idea why this is but I've always thought in terms of net, to the point where I'm a little dubious of jobs offering gross.

I honestly don't know what the implications for me would be in looking for gross rather than net. Currently when asked for my rates I say I am looking for £450-500 net per week for a full time job (10-12 hours per day, five days a week), or £9-10 an hour net if thats what I'm asked for. I don't have any clue what this would be gross!

If this system were to change it would either take forever or require something major like a change in the law because I just never come across gross. There is one agency I see advertising gross, SNAP, but they are an agency dealing with special needs children and have different requirements to register so not many nannies would come into contact with them.

SnapFrakkleAndPop · 03/02/2011 14:37

Oooh and having gross pay in a contract will benefit nannies because it will help prevent employers paying cash in hand and thinking it's okay. I have no idea how they justify it to themselves but I suspect it's something along the lines of 'well it says net in the contract so I never agreed to pay it so why should I'.

This is good for employers because then they don't run the risk of HMRC's big fines too.

SnapFrakkleAndPop · 03/02/2011 14:30

By getting nannytax to change their tune for starters. Their flipping survey quoted net pay! Sample nanny contracts and nanny payroll companies should be encouraging people to quote gross.

The current ANA contract has before/after tax as options for expressing pay which is pretty shocking.

I think nanny agencies are a big part of the problem but they're probably responding to nannies saying 'but what's that net?'. Even if they advertise net they should be pushing gross in contracts (and then they could charge fees as multiples of gross salary and make more money - win win).

I'm a very strong advocate of gross pay. For the nanny it means they benefit from increases in the tax allowance, they can easily produce evidence of their income (therer are threads about mortgages and problems with net pay contracts on some nanny messageboards) and they don't have to worry about their tax code being split between jobs or changing if they lose one of their jobs. For the employer it means they can accurately calculate how much a nanny will cost them regardless of whether they're employing someone with a second job or not and they don't get any nasty suprises like student loan repayments on top of an agreed net salary and their calculations on tax/NI.