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Original poster

Abolish tax on nannies or allow deduction on salaries paid to nannies

38 replies

absag · 11/04/2012 20:15

Please sign this petition if you agree with the logic below:

epetitions.direct.gov.uk/petitions/32739

Parents are required to pay PAYE and NI on employing nannies.

British parents shoulder some of the highest childcare costs in the world.

The average gross salary of a full time live-in nanny in central London is £27,000, which includes £9,500 in tax and national insurance contributions.

Because a nanny?s gross wages are paid out of the parents? after-tax income, this effective double taxation means one parent needs to earn £37,000 a year just to cover the cost of the nanny.

Action government should take:

1). If nannies are treated as employees than parents should be treated as employers and allowed a tax deduction.

2). If not the requirement to pay tax on nannies should be removed

I believe that this will be tax neutral as lower childcare costs will enable more mothers/ fathers to work.

OP posts:
Original poster
absag · 11/04/2012 20:58

I know that this topic is very emotive and there would be all sorts of arguments that are in favour of and against this topics .... like nannies are only for rich people, why work so hard that you have to rely on nannies etc etc...

But in my view there is a very simple logic in the argument I am putting forward... let us say if government allows nannies to be treated as employees, treats parents as employers and allows a tax deduction...

It benefits the economy as it makes 2 people employable ... the father / mother who can now work as they can afford childcare.... second the nanny who will now be employed instead of the mom / father who were looking after the kid...

and this will benefit middle class more than rich people who can afford nannies without the tax deduction anyway...

OP posts:
margoandjerry · 11/04/2012 20:49

Katie, I think there's some cross-purpose talking going on here. This is about making nannies tax deductable - or paying them pre employer's tax which is what happens for other employees.

So yes, Athing, employees generally are "tax deductable" - ie paid their salary before the employer's own tax is calculated.

Gigondas · 11/04/2012 20:45

I would be more careful than ever now crackdown

Negotiation of a gross wage has nothing to do with your obligation to withhold Paye /nic - you still have to do that and pay employers nic as a nanny is classed as an employee.

ReactionaryFish · 11/04/2012 20:31

Oooh Katie, you best hope no-one reports you to HMRC...

ReactionaryFish · 11/04/2012 20:29

It would cost a lot, which is another reason why it won't happen, but that's not to say it's not fair.
to answer your question, if a company or other business hires and pays for staff, it deducts the cost of doing this before it is taxed on its profit. They are not required to pay their staff out of taxed profits.

KatieMiddleton · 11/04/2012 20:28

What a load of old rubbish and I've employed a nanny! If you don't want to pay a nanny's tax and NI negotiate a gross wage. Stupid petition.

Now if it was about making childcare tax deducatable or allowing people who are not employees or whose employer does not offer childcare vouchers to buy them that would be worth a look.

AThingInYourLife · 11/04/2012 20:27

What tax deduction do you think parents should get as the emplover of a nanny?

Is hiring staff tax deductible?

I can see your point for employer's NI, but other than that no.

If nannies are fully tax deductible, then all childcare should be.

And that would cost a lot.

Gigondas · 11/04/2012 20:25

Agree with reactionary fish logic

Gigondas · 11/04/2012 20:25

Not sure I follow your double tax argument but I do think ,if being fair, you can't ask for a deduction just for nannies as any childcare cost is basically something you pay as a "tax" for working.

ReactionaryFish · 11/04/2012 20:24

That number would reduce if parents were allowed tax relief on the costs of employing one, of course, damsel.
I completely agree that nannies should be treated as employees, with them and their employers liable to tax and NI on their wages. but these costs should be tax deductible.
Twill never happen, of course, largely because of people who will bleat it's a tax break for the "rich."

margoandjerry · 11/04/2012 20:23

Most employees' salaries come out of pre-taxed money. In our company all our employees are paid pre-tax. If I employed a chauffeur I could pay him pre-tax. but not a nanny. That's the anomaly.

DamselInDisarray · 11/04/2012 20:21

And what about the not inconsiderable number of parents who can't afford nannies?

DamselInDisarray · 11/04/2012 20:21

But why shouldn't nannies be liable for tax. They have to pay tax and NI on their salary just like everyone else. The employer's NI might be a different thing, but it certainly isn't double taxation if the nanny pays tax on his or her salary. (in any case, double taxation is fairly normal, what with VAT on purchases made with after tax wages and all that).

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