Paying nanny. No idea! Please help.

[Workreturner]

I’ll be employing a nanny for 5 hours a week.

Her rate has £8.50 an hour. This is her only job so she’ll be well under the income tax threshold.

She is ofsted registered.

Do I need to pay National Insurance? Sick pay? Set up a pension for her?!

I will be in receipt of working tax credits and then UC when my area moves over, and so I will be entitled to gov assistance with childcare.

Huge thanks

yes to all of those. if you use someone like nannytax they will organise all of that for you for a small fee per year. is that £8.50 net or gross? as it would be an extremely low nanny age for £8.50 gross, so i would assume net and tax needs to paid on top

Depends if she's self-employed

adam - a nanny cant be self employed if she is needed the same time and days every week.

You would fall under the threshold for needing to pay NI, tax, pension, employers NI.

SSP I'm not 100% sure on, but again I think she is below the threshold for payment.

You don't need to use nanny payroll companies, you can do it yourself but you do need to understand it. I use sage one as my payroll software. It costs me £7.20 per month.

Remember that you can also add extra costs to your tax credit claim, and later UC. So for example, I include all the above costs, plus the cost of gas/electric/water/food and wear and tear on the house for those days she is there as my house would otherwise be empty, and my costs therefore lower. I allocate £5 a day for this expense. I could probably go higher but I'm happy with it. You can also include costs for activities she takes your child to. As again, it's an extra expense directly related to your childcare arrangement.

Just be aware that on tax credits, you need to work 16 hours as a single parent, or both work 16 hours as a couple to get financial assistance with childcare unless you meet certain other criteria (eg. Carer). UC cover childcare costs with no hour worked restrictions.

Oh heavens, split opinion!

@ThisMustBeMyDream

I’m a single parent working 24 hours a week.

How must I pay the nanny in order to get give assistance? Direct debit?

Re assinf extras, how does this work in the sense of how do you explain this to HMRC if they see you paying the nanny a figure that doesn’t rally with what your chatting?

Thanks so much

I'm also a single parent working 24 hours a week.

I'm on my 2nd compliance check so far. I write a cover letter with it explaining the breakdown in costs. I provide evidence for everything other than the £5 per day and the £10 a day for activities as you can't really evidence those. They accept that there will be costs you can't prove because it's the nature of employing a nanny.

This current compliance check I've provided wage slips, and bank entries showing wages, payments to hmrc, payroll direct debit, Ofsted registration cost. Along with my letter detailing how I have arrived at my calculation.

You can pay any way you choose by the way. Cash, bank transfer, standing order. I pay bank transfer as I like an evidence trail.

No you don't need to do anything OP. I would pay direct debit though and just get her to put something in writing to say it's her only job and get her to sign it. I've been previously registered as an employer for nannies and then de-registered when we started having au pairs)

She's not entitled to SSP etc.

Superb advice
Thanks

www.gov.uk/new-employee/employee-information This is the form you will need for tax/ni purposes.

You will also need a contract. I googled contract for nannies and then copied and pasted it to word, and edited to suit my own requirements.

Sign up with PAYE for Nannies, it's almost exactly the same price as thatwould quotes for the sage subscription, but they also cover you for legal advice if you need it and provide a contract. Other providers also available (Nannytax is supposed to be good) but PAYE for Nannies I've used for years and have been very happy with them including several long chats to their legal advisor when we had some issues with a nanny, and they also handled a nanny on maternity leave for us and did all the paperwork when we had a maternity cover nanny. They also helped sort out pension stuff for our nanny when it became obligatory to provide one. It's worth every penny.

Xiao paye for nannies is double (£204) the sage one subscription. The only way to get it to £138 is to not have them take on the pension side of stuff.

I'm not a genius, but I've managed all the other stuff without too much hassle. It is definitely something most people can do.

Oh how strange, I pay £99 which when combined with the pension stuff I thought was great value. I wonder if it's because I've been a customer for so long 

There was meant to be a face on the end of that!!!

@ThisMustBeMyDream

Thanks so much

So you issue wage slips?
What payments to HMRC are you referring to and do uuu calculate?
Does the nanny haveto be ofsted registered? (She is)?

Many thanks

Yes - the payroll software makes the payslips, and I click a button which emails them to the nanny.

Payments to HMRC are tax, NI, employers NI (you may not need to pay this, you'd have to check if there is a threshold). The payroll software reports all this to hmrc, and works out the payments I need to make.

Last month I paid the nanny £936, no tax, NI plus employers NI of £69 to HMRC.

She only needs to be Ofsted registered for tax credit/UC purposes, not for any other reason.

Thanks so much
Sorry what pay roll software do our use?