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Paid childcare

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

Original poster

are you exempt from tax and NI if nanny is self-employed?

40 replies

mommie · 24/01/2006 12:52

i am about to employ a nanny two and a half days a week at £8.50 an hour. she says not to worry abour tax or NI because she is self-employed and will do all that herself. Is that right?

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uwila · 24/01/2006 15:51

Well, I would definitely say that having a nanny has made my life easier not harder. In fact I can't even fathom giving it up.

Original poster
mommie · 24/01/2006 15:46

uwila - being a full-time working mum and just trying to cope with the child care issues that that raises means i don't want to get bogged down in the bureaucracy of being an employer myself and having all the responsibilities for a nanny. bugsy2 - i know loads of people like this too.

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uwila · 24/01/2006 15:44

Oh Bugsy2, you are braver than I am. I thought of saying that but thought no, the mumsnet police would soon be here to pulverise me. It's true though. I was talking to a nanny just last night about this. She said she had two other job offers that both wanted to pay her completely cash in hand when she accepted the job she now has (which is not cash in hand).

Bugsy2 · 24/01/2006 15:40

mommie, I wouldn't like to advocate this, as it is of course, illegal. However, as a statement of fact - there are loads of people who pay occasional child carers cash in hand - just as they do their cleaners - and no one is any the wiser.
One of my former aupairs used to do a 12 hour day for a family on the two days I didn't need her and she was paid cash in hand - £70 for each day.

Frieda · 24/01/2006 15:09

I think nannys can be self-employed if they work for two or more employers - I know people who have done this. We were going to do a nannyshare with another family who were both lawyers and the nanny was going to work on a self-employed basis and I'm sure it would all have been above board. Like chipkid suggests, I would make sure you see something from the tax office to ensure that is the case.

uwila · 24/01/2006 15:03

Ah, I have that problem too. I have a nanny. What is it about hiring a nanny that scares you off?

Original poster
mommie · 24/01/2006 14:56

i think the nursery 5 days a week is the only option; we don't have a spare bedroom for an au pair. at the moment dd goes to nursery 3 days a week. i just felt 5 days was a bit excessive, and i could nor find a childminder who would keep her til 7pm when i get home from work.

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uwila · 24/01/2006 14:54

Well, I'm afaird youcan't hire a nanny in this country without becoming her employer. Believe you me if I could avoid it I would.

If you want to avoid the tax, maternity pay, etc. liability, what about getting an au pair / childminder combination where the au pair get them ready in the morning, does the childcare/school run, and maybe some household chores like laundry, and possibly occassional babysitting. You wouldn't have to take the childminder on as an employee, and the aupair doesn't cost an arm and a leg.

Original poster
mommie · 24/01/2006 14:41

i will need to talk to her; TBH, it sounded quite simple but it has suddenly got complicated. i just don't want the hassle of becoming an 'employer'

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Bugsy2 · 24/01/2006 13:44

mommie, do you think she is currently paying tax & NI on the money she earns as a cleaner? If you suspect that she is just going to pocket the cash/cheques you pay her then that is a risk you have to take. If the tax people catch up with her, it would most probably be you who would be liable to pay the tax & NI she owes - not her.

uwila · 24/01/2006 13:16

And, above all, check with the Inland Revenue that you can hire her for two days a week on a contract basis. I doubt you can. If you could, then I could get together with two other families who employ nannies and we could swap half way through the week, and then none of us would have to pay the nannies' taxes. We could start a nanny rotation section of mumsnet. We'll swap them around and everyone will avoid taxes.

I'm joking of course!

uwila · 24/01/2006 13:13

You are on shaky ground, I'm afraid. I assume £8.50 is gross. You are not responsible for paying her tax, but you are legally obligated to take it out of her pay cheque. And you are legally obligated to employers tax. Seek advice from nannytax.co.uk. They have a very helpful website. Nannypaye is cheaper and offer a good payroll service, but they are not as knowledgable about employment law.

chipkid · 24/01/2006 13:06

I had this situation with my nanny-she wanted to remain self-employed. The difficulty for you is
a) Nannying is rarely a self-employed position-you ahve too much control over times and days and activities
b) If the nanny does not account to the revenue-and the revenue decide that in reality she is your employee-they will treat the £8.50 as her net wage and wil come after you for tax and ni and employers ni (if you go down this route MAKE SURE YOUR CONTRACT PROVIDES FOR AN INDEMNITY FROM YOUR NANNY IN THIS EVENT
c) If the revenue do investigate and decide that this is an employment situation-whether she has paid her tax or not you could be ordered to back pay employers NI for the period that the nanny has been self-employed and you may receive hefty fines for failing to pay this at the time etc

Make sure she gets something in writing from her tax office to confirm that they will allow her to be self-employed.

Original poster
mommie · 24/01/2006 13:04

she does work for other families but only as a cleaner

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Bugsy2 · 24/01/2006 12:59

How many other jobs does she have mommie? She would need to be working for more than one more other family to be genuinely self-employed. If she is not, you would actually be liable for her unpaid tax & NI. It is definitely a bit of a grey area. I would check with her & then telephone the tax office for advice.