advice needed - costs of a nanny, can i afford one?

gingerninja - the 'going rate' depends on what area you are in and how much experience the nanny has. For an experienced nanny it will probably be from around £8 net per hour (up to about £10 per hour) which, with tax added to it, would be about £117 per day (rough estimate since if nanny has another job on the other 2 days a week already that will make it even more expensive), Add to that the other expenses..light, heat, wear and tear on your home, play group and activity fees, petrol/car allowance, nanny's meals etc.

Out of interest, what is the 'going rate' as it were? I have one and one on the way and am wondering what the cheapest childcare option will be once I'm back at work after DC2. We currently pay £45 per day for nursery for one and I'm at work 3 days. Does a nanny sound a cheaper option?

I agree with AN. CM will be much better value for money in this situation unless you work unusual hours. Also, I don't know where you live, but I wouldn't want to be over-reliant on a nanny share to work, if that is the only way I could afford a nanny. It is hard (at least where we are) to find a compatible family in terms of distance, number of kids, timings, and the undefinable quality of just getting along well enough. If this share doesn't work out, would you be able to find another one relatively quickly? I think it's better for you if you at least understand what else is out there, if you need a fall back plan. It's not clear to me whether your DCs will be looked after at the same time as the other families, but if it's together, it's worth emphasizing what Nick said re costs it's not just laying out your expectations for the nanny, it's going to be important for you and the other family to have similar expectations.

We had a 'recommendation' for our first nanny as well and it didn't work out at all - one of the reasons we hesitated to end it was that she was a 'known quantity' as such, etc etc. We were intimidated by the process of hiring a 'stranger.' In reality when we started interviewing for her replacement we found some lovely people and a nanny our daughter was crazy about. I suspect once you get out there and start meeting CMs from the council list you will do the same and feel more comfortable with the concept. Just make sure to take up references really carefully, and it will be fine.

When your nanny goes on maternity leave you get more back from the government than you pay out. There is a cash flow issue, in that you make the first month's payment before putting in your claim. However the cheque which comes about 10 days later is for the whole maternity pay for the rest of the tax year ie a big lump sum.

I have had two nannies go on maternity leave now. Replacing them is actually easier than if a nanny just resigns, because you get so much more warning. And in terms of her coming back, you can do the maths on childcare costs: unless you are prepared to have nanny bring her baby to work (which is your decision not hers) nanny pay does not cover child care for the nanny's child. Both my nannies said they would not be coming back, and I just recruited a perm nanny.

I think for only one child and part time you will find a childminder is considerably cheaper. Will you only use someone who comes with a personal recommendation? If you work pretty normal hours (i.e. don't need a really early start or a really late finish) I wouldn't think the nanny option gives you value for £. Tw+ kids and full time is another story.

Cakefiend - I agree with all the other messages. I am not rich, but I have a nanny as this is the only childcare solution that would work for me. What you need to do is work out how much you are prepared to pay (nanny share sounds good) and as others have said, specify in the contract that you will be paying statutory sick pay, etc.

Re daily expenses, you just have to make it very clear to the nanny what you are prepared to pay for. For example, my nanny uses the bread and milk in the fridge, but otherwise brings her own food - she does not expect me to provide her meals (and she is happy with that).

good to know, i hadn't thought of that either

Don't forget about the day-to-day costs, things like mileage (if nanny uses their own car), activity expenses, food, heating/lighting costs.
Some nannies are very good at budgeting, others are not. You may need to keep tight controls on how much money your nanny (or nanny share) spends. As a nanny, I find a £20 per week kitty is fine for covering activities and misc.expenses (swimming, science centre, ice-lolly etc.) With luck nanny will spend less - currently I seem to go through about £3 per day, but costs can shoot up if we say go on a steam train, or go swimming during school holiday period (so no baby/toddler discount).

Most nanny contracts stipulate statutory sick pay rather than full pay (although many employers will pay full-pay for the occasional sick day), and I think maternity pay is rebated as you are a 'small business' so it doesn't cost you money (although will cost you in time and stress of hiring maternity cover) - www.nannytax.co.uk has some helpful info, or try ringing a company like nannypaye.co.uk and asking their advice.

I am not seriously rich and I have a nanny.

Sick pay need not be a problem as the minimum is statutory sick pay, which is a pittance. I offer 3 days per year paid and anything on top of that is at my discretion (She works 3 days a week for me). It is fine to offer just statutory but you need to make it clear to the nanny when you interview that that is all you are offering.

Maternity pay costs you nothing as you claim it back from the government (and in fact you get a bit extra back from the government for being a small employer). But it's the hassle of finding someone to replace her for the time she has off. You would have to find a temporary nanny to cover her. I've never been in this situation (touch wood) so not sure how hard or expensive it is to hire a replacement nanny.

The only extra costs are possible Ofsted registration if you need that (but it would save you money anyway), pay roll costs if you choose to use a company to do it for you (around £150 per year).

Hope this helps a bit. I was a bit freaked out about the responsibility of being an employer but actually it's been fine. I would highly recommend having a nanny.

I nanny share though can be more complicated but does obviously work out cheaper.