Is Mr Anchovy about? Or any other nanny tax knowledgable people? Splitting tax code advice needed!

I think you are being very generous to Flo there Outraged.

I think she googled net pay arrangements just before her last post

I've always wondered who exactly benefits from the whole way that the nanny industry operates it's Paye schemes. It's such a strange anomaly and as someone said earlier it dates back to almost pre-historic pay arrangements for domestic staff. Other industries have managed to change the way things work as the rules change. Think IR35 & CIS are the most obvious, so I do wonder why not nannys iyswim.

I think we just have to accept that Florence and her 5 year old are significantly cleverer than the rest of us dimwits who find the whole thing a bit confusing from time to time.

'That might also explain the nanny's surprise.'

Exactly. It's very possible that she has never had a gross pay agreement before. I know nannies in their 50's, who have been working for 30+ years and have never had a gross pay agreement. It's unfortunate, but it's the reality.

I find tax easy.

I find looking after children who aren't mine five days a week hard.

Horses for courses...

I don't think she'd have any trouble finding another family foolish enough to offer a net salary actually.

I see - if that is the case the OP might have a problem. That might also explain the nanny's surprise.

Yes I get you are talking about net pay arrangements. I think that is obvious; the OPs nanny has this agreement with her first family.

But Net agreements should not be made, an employer will never know what tax obligations an employee may have. They might have students loans, tax debts from previous years, pensions, jobs they don't declare to them.
I do get it thank you and I think you are other posters are making it far more complicated than it is.

I repeat you have a tax allowance :
Once you have earned that amount you pay tax at 20 p in the pound.
It doesn't matter if you have a net or gross pay agreement you will still be liable to pay that amount of tax.

The OP stated that the nanny was surprised when she found she was only taking home £8 and not £10 she clearly didn't understand that having used her allowance (in job 1) she was now liable to pay 20p girls every pound.
If she had understood the basis principle above she wouldn't have been surprised.

Wow that's complicated

The irony is that you clearly do not realise that the rest of us are talking about a net pay arrangement, also known as net to gross pay.

Not usual or particularly easy to understand from what I gather on this thread.

You, for instance, don't get it

'But again is that really complicated?'

Have you read the thread? Because a lot of people here are confused. Including you. You've come to the conclusion that the nanny doesn't want to pay tax....when there has been absolutely no evidence of that. You've clearly misunderstood somewhere. So yes, it is pretty complicated.

Merry the majority of nanny jobs are still advertised and agreed net (unfortunately), so I don't think she'd have any trouble finding another family foolish enough to offer a net salary actually. I'm not saying she should do this btw, I'm just explaining why the OP may be concerned that she'll leave.

outraged, I think she would have difficulty finding anybody apart from the other family to pay her on a net pay basis given that she has used up her pa and most salaries are agreed gross.

Outraged
Understanding Gross /Neg agreements - that will be Gross = pay before tax and NI taken off and Net = pay after tax and NI taken off.
Wow that's complicated :)
Understanding splitting the tax code. Well she might find she doesn't have a choice with this. But again is that really complicated?
My main bug is that OP is posting on here about someone else tax problem. Treating the nanny like a child not a professional person. I find it depressing. The government have tried to enhance the intellect of childcarers by encouraging level 5 qualifications in nurseries etc. encouraging childminders and nannies to be qualified. But at the end of the day children are still be cared for in the large part by low educated people. Iv clearly hit a nerve with many posters.

Merry I don't think anyone has mentioned the current employers increasing her hours?!

That definitely wasn't what I was talking about. Apologies for the confusion. I was talking about the nanny leaving the OP and finding a second net pay job.

Well, it depends.

The nanny I referred to earlier had been working 4 days a week, at £10 per hour net for her other employer. When she went down to 2 days a week, they cut the gross pay to keep it at £10 per hour net - they also cut it when the tax free allowance went up, so they didn't really have an option but to increase it when she got another job.

It will depend on how much the other employer wants to keep her vs costs of recruiting etc and whether the salary is generous or stingy

That is what I clarified in the next post - the current employer would be daft to increase her hours at a salary that is based on her take home pay - unless they know that the amount they pay gross now is below the market rate and they are effectively using her personal allowance to subsidise their childcare.

Florence this isn't about understanding the basics of the tax system. It's about understanding net/gross agreements, splitting tax codes, what that means for all involved etc. If you read this thread you can see the confusion that it's causing. You're obviously entitled to believe whatever you like, but when that belief is clearly wrong, it does make you seem a bit nutty.....

merry she wouldn't encounter the same problem if a second family also had a net agreement, but they would then end up with a big tax bill.

I think the nanny needs to work out her overall (from both jobs) wage and see if that's right. If it is, then there is no need to worry at the moment. If HMRC split the code automatically then she'll have to deal with that with her other employers.

(I suppose she wouldn't encounter the same problem if her other employer stuck to their net pay agreement, but they would be a bit daft to increase her hours on that basis).

Also, why would you lose her? - she will encounter the same problem in any second job (unless they pay her cash in hand). She would also encounter the same problem if she worked more hours for her other employer (although the effect might not be so obvious)

At the previous agreed net rate I mean.

duh! yes, of course you are right. Never post before coffee!

In the end I think it comes down to whether the nanny is charging the market rate for her services, or she is so good that she can ask for a pay rise from her other employer and they will bear the cost. In the circumstances I think it would be very cheeky to ask for them to pay her salary net when she is getting more money from you, but maybe she is that good.

I can't see the other family agreeing to stick with the net pay agreement if her tax code is split - wouldn't that increase their costs by about £5k?

Sorry still disagree because it is not about understanding complex tax only one simple principle :
You have a tax allowance, @10 K last year once you have earned that you pay 20p tax for every pound you earn.
If the nanny understood that she wouldn't have wondered why her pay was lower in job two.
I repeat it is simple.
And yes OP I get that if she transferred some of her allowance to you she would earn more because family A have a net agreement.
But how long would that last?
Surely they would just say they are changing to Gross and issue new contract . Unless they feel nanny is due a pay rise.
I find it disappointing to be honest that so many nannies and emoyed still talk re Net Pay it doesn't happen in any other job.
I'm also very aware that a lot of employers pay cash in hand and thus some nannies are not used to paying tax.
If you don't think that's true just go on the nanny Facebook page.
HMRC are aware and will prosecute

Florence are you feeling ok? You're normally a 'normal' poster, but you are sooooo far off base here, you're making yourself look like a nut.

To the posters wondering why nannies talk in net it's because until very, very recently ALL nanny jobs were advertised net. Jobs from agencies, jobs in the post office window, jobs in nanny magazines, jobs online, jobs through word of mouth. ALL jobs. It's hardly surprising, or difficult to understand, that people working in a market where ALL jobs are advertised net will discuss net wages. Most people taking their first nanny job are young and won't have had much prior work experience. They enter a workplace where everything is net, they talk net. No-one is born with an in built knowledge of the tax system and it isn't taught at school so if you work in an industry where net is standard that's what you go with.

The reason nanny jobs are advertised as net, harps back to some ancient tax rules regarding domestic staff.

Things are changing, but it will be slow as these things always are.

OP, it sounds like when you offered gross pay, you sat down and worked out with her approx what that would be net, but you made a (reasonable) assumption when you did - so the nanny, who until now has only thought in "net", as many un-MN nannies seem to did think she knew what she was getting.

But they have scrabble. Not just policy but the entire way the system works.

Yes, I agree that April 2014 was a very different time for Paye.

No such thing as tax offices anymore, not really. Everthing is automated and central. Been like that years tbh.

Immediate code splitting is a recent thing. Until RTI Hmrc simply didn't have the information until after year end unless a P45 was put in.

Not sure why Flo and co are so quick to disagree

I'm laughing at Florence anyone who thinks a person who can't understand the simplicity that is the Uk tax system is a bit dim.