Dodgy nanny employment practices

Considering hiring a nanny who is bulgarian. She has a yellow card meaning she is self employed. She has worked as a nanny before but I want to make sure that she is a legit employee. I think the yellow card is not sufficient.
Do I have to register as an employer + pay taxes as an employer? Does she need additionnal paper from Home Office?

Bless you mranchovy, thank you for the advice! I really, really do not want to be a rip-off sleazy employer, but neither do I want to pay a payroll service and become a formal employer unless I have to. I was going to sign up with a payroll service, just because I was scared of putting a foot wrong (to be fair, the guy at the service said, 'Look, it's really not necessary, but if you want peace of mind, I'll send you the P46 and you're covered.,)

You are a very nice, helpful person. Thank you.

Actually maraisfrance, to totally cover all eventualities...

If the nanny took another job, earning say £300 for 35 hours a week she may well want her tax allowance to be applied to that job. She would have to write to her new employer's tax office giving them your details. The new tax office would then contact you, possibly saying 'why aren't you registered as an employer' until you point out that she is your only employee, earns less than the the threshold and had no other job when she started with you.

They may then require you to register as an employer, issue you with a tax code for her and require you to operate PAYE, which would be a real pain for such a small amount (you could use the words 'disproportionate regulatory burden' if you wanted to get grumpy with them). Now if you had a net contract, this would be bad because you would have agreed to increase her salary so that she still got £90 net - this could cost you an extra £23 a week! But as you haven't got a net payment, instead there would be roughly £18 tax to deduct from her salary.

So in this worst case, you would have to run a payroll or get an agent to do it for you (costing from £100 a year) but you wouldn't otherwise be worse off and, importantly, you don't have to do anything until HMRC contact you.

Ah Treeesa, the situation in the NHS is a special one because one person may have more than one contract of employment covering essentially the same role - perrhaps with two different trusts (possibly acting on their own account, or possibly acting as agent for the Secretary of State for Health or whatever other statutory legal entities might exist - like I said, it is complicated).

In this case it may well be reasonable to expect the employers, possibly acting through a single head of department covering the two jobs, to take account of the total working hours.

A similar situation exists in schools where although the individual Governing Bodies are considered in some respects to be independent employers, the reality may be that there is only one job.

Yes maraisfrance, that is a normal gross pay agreement and as long as you have that signed P46 with box A or B ticked HMRC cannot ask you for anything more.

Oops I'll try that again, with better grammar too:

"The employer shall pay the employee by way of remuneration such sum as shall result, after deduction of Income Tax and National Insurance, in a net payment to the employee of £80 per week."

MrA - is IMHO a valid legal disclaimer

mranchovy - so if my contract with our ASN says simply, 'We've agreed a maximum working week of 10 hours and I will pay you £90 a week,' that is a gross pay contract and I wouldn't be leaving myself open to subsequent problems with NI/tax issues?

thanks mranchovy - yes I guess my example in the NHS is a completely different case. It is still a burning issue for some hospitals and trusts so there'salwaysthingsflying around about it.

Going back to nannies - I find it strange and a bit antiquated in this day that a nanny is classed as a domestic servant even when they are living out?

maraisfrance a net pay contract would say something like:

"The employer shall pay the employee by way of remuneration such sum as shall, after deduction of Income Tax and National Insurance, result in a net payment to the employer of £80 per week."

Treeesa I was explaining the position from a tax/NI point of view', but to cover the WTR aspect:

Workers 'employed as a domestic servant in a private household' (unfortunate and outdated wording, but this does include nannies) are exempt from the maximum weekly working time provisions of the Working Time Regulations.

The more general situation is complicated: it is now sometimes held to be best practice for an employer to take into account other employments when looking at the maximum weekly working time, but there are real practical difficulties in doing so, and the legal basis for this is IMHO uncertain.

mranchovy - I am certain it is an employers responsibility to check that someone is not working for more than the 48 hours (collectievly) unless the person has opted out of the working time directive - even if some of those hours are being done for another employer

There are plenty of fab foreign nannies who are perfectly qualified to be my nanny. I don't actively seek forgeign nannies, but I seem to end up with them every time.

It does not necessarily follow that they are are taken advantage of. And they are also not substandard to their British counterparts.

Isn't this what being part of the EU is all about?

Thanks mranchovy, that's what I thought, based on the advice I got from the payroll service, and that's the p46 I have from her.

But I don't understand how to distinguish between a net pay and gross pay contract when what I pay her doesn't take her (or me) into a level of pay where this distinction would be effective - she doesn't earn enough (with me) for NI and tax to be an issue, so what she earns is both gross and net, if you see what I mean,

I stand corrected. That does make more sense.

Just to confirm, both of the previous posters are wrong. The information linked to applies when you are taking on an employee who already has another job.

maraisfrance from a tax/NI point of view, you only need to be concerned with what you pay your staff, what they earn elsewhere does not affect you. Provided you have a signed P46 with one of the 'This is now my only job' boxes ticked, reflecting the fact that she only worked for you when she started, you need not operate PAYE (if you never pay her more than £95 in a week).

Her other employers should have P46s from her with the 'I have another job' box ticked and that means they have to operate PAYE and deduct tax from every £ they pay her even if she only earns £10 a week.

The only way a sole employer can be affected if an employee takes on another job is if the nanny requests and HMRC agree a tax code split and your contract with the nanny is for a net wage. That is why most payroll professionals advise that net pay agreements are always a bad idea, and tax code splits are only a good idea in special circumstances (when both employers pay less than the PAYE threshold).

Maraisfrance - see here. Looks to me as though you should register and get a tax code for your nanny if her total weekly earnings exceed £110pw.

maraisfrance - I thought someone else may give some advice who is more aware of employment and tax issues. To my knowledge if you are employing someone even just for a small number of hours you still have the responsibility to ensure that all paperwork, working hours and so on are in order. If the person has more than one job then I think you may still be responsible to ensure everything is in order.

I say this because where I work, a few nurses were working very long hours and others were known to be working bank work for other agencies. A little contentiously a few years ago staff were told asked to sign a disclaimer saying they personally agreed to work more than 48 hours.. I think the hospital was not able to keep track each week of working hours from people's 2nd jobs (as they fluctuated) and decided to apply a broad brush to get everyone to opt out. Staff were told it is still the employers responsibility to make sure people aren't working more than 48 hours across two or more jobs. I know my example is about hours - but I would not be surprised to fins it applies also to tax/NI contributions due.

NannyNorthLondon - did you really get those replies via Gumtree? Good grief

And on the gist of the thread - I was a bit surprised myself about the apparent ubiquity of cash in hand arrangements with nannies when I investigated hiring one a few months ago. I can see why people (employers) do it, particularly if they're in the 'can just about afford it' bracket rather than the 'rich' bracket. And I can see some nannies might like to have an element of cash in hand in their pay packet. But I agree with everyone who says this kind of thing downgrades the profession - makes it seem less bona fide.

That's the real reason I don't currently employ a nanny actually - because I would want to pay bona fide wages but could only afford under the table ones, IYSWIM!

Ha!

blondes being from another country doesnt have to mean that you cant speak english and you have to be exploited by families...
You can be a good nanny even if you are foreign and be a bad nanny even if you are british!
I remembered now.. when I advertised on Gumtree I received a few replies saying things like "why dont you go back in your country" and "you foreings shouldnt be nannies" and that is hash, because if you want to be rasist ignorant then why take a job in wich your employer is not British?

NannyNorthLondon - I agree with you that a nanny with a blue card is entitled to work as an employee but a Romanian doesn't have the right to change from self-employed to employed.