Nanny with additional (non-nannying) job & tax

[SE13Mummy]

I think I may have found Mary Poppins but could do with someone spelling out the (probably obvious) issues with being self-employed to me...

Ms. Poppins works on a very part-time basis for an organisation, in a role that is not nannying (or even similar). As this is sessional she is registered as being self-employed. In her current nannyng position she has continued to be sef-employed, is paid gross and does a tax return etc.

She is happy to continue doing this but has said she's also happy for us to employ her 'properly' if that's what we'd prefer. At the back of mind I'm sure we should be going down the second route but, it's the end of term and my brain isn't working. Could someone remind me of the reasons why it's important to properly employ a nanny instead of letting him/her be self-employed and deal with the tax?

Thank you.

Because nannies don't usually meet the requirements for being self employed. The general picture a status officer would get from working for you, would be that you are the boss and they are your worker. You are calling the shots.

Important for the employee as well, as they get different employment rights.

No problem them being Employed when working for you and self-employed when working for someone else. Employment status is done on a Per Job basis.

Thanks for that. Are there any benefits to a nanny in being self-employed?

There really isn't a choice in the matter. She comes to you on a regular basis to do a job, as prescribed by you (and laid out in a contract). She is your employee. Make sure you pay her in gross, as the other job will have likely used up her tax free allowance.

If a nanny is self employed, they can dodge tax due by underdeclaring their income. Not that anyone would do that.

If nanny is wrongly self-employed you are the one who gets stung by HMRC for the fine and back-payments. That's a pretty good reason.

The only benefits about being self-employed are that you get to claim expenses. There are, however, several drawbacks including but not limited to no maternity pay, no SSP and no redundancy.

Oh and you get to decide when/if you want to work - that's the other benefit I was thinking of. But you don't get holiday pay.

If she's already doing her own tax return then it shouldn't be a problem for her - you pay her correct5ly (ie gross salary including tax and NI which goes straight to the tax man). At the end of the year you issue her with a P60 which will have on it her taxable pay and the tax paid and she uses these figures in her self assessment form. It allows you to have more than one source of income. As long as you pay her correctly it's up to her what she does with her income she gets from other sources.

It will make no difference to her net income whether you use up her personal allowance or whether she saves it for her self employment.

Thanks for all your information. She would prefer to continue being self-employed (she'll only be with us 3-days a week and term-time only) for the time being. We've agreed a gross salary and also that she'll sign something to the effect of undertaking to sort out and pay tax and NI (the latter of which is already set up as a direct debit).

SE13 Mummmy
I really think you need to ring HMRC and check this because if she is coming on regular days to you at a regular time I don't think she can be self-employed as a nanny. It's not like "consultants" so to speak in other professions, and even in those cases (we use a lot of subcontractors in my job), they are tightening up on who HAS to be classed as an employee. This seems to be something that is really on the agenda for the government.

That said, I don't really think the question is someone will 'snitch' on you, like people often mention here. It's more the case of what you would do in a dispute if you needed to get rid of her. You would be liable for the back tax, I don't know if that contract would be worth the paper it's written on. Secondly, does she really understand that she can't turn roudn to you and expect the usual maternity benefits which an employee would get, if she needed them, or redundancy benefits?

You may find she wants to have her cake an eat it too - if she is contracting through a company tehre are tax benefits for her but when the advantages moved against her, she might change her tune. Which wouldn't be good for her.

If she really can be self-employed, it's no skin of anyone's nose to ring HMRC and get this confirmed.

Sorry which wouldn't be good for 'you.'

if this nanny is working for you on a perm basis and you are telling her what days/hours you need then she is employed

tbh makes me wonder shy she wants to be self employed in your job,and wonder if she wont actually declare the income

I shall look into it again and see what HMRC have to say - need to contact them anyway to sort out the final bit of tax for our previous nanny so hopefully I can kill two birds with one stone/phonecall.

Try calling one of the Nanny Tax companies, they know a lot about these things. I use NannyPaye, they are always really helpful and a lot less scary than HMRC, but they will give you advice even if you are not with them - their number is 08454660044.