Shall I pay nanny cash in hand?

[diamondlil]

I have 3.5 dd and am about to start f/t work. She will go to private nursery 3 days p/w, and I have been offered 2 days with nanny share. The nanny is lovely, v experienced, good refs, and does 4 days p/w with another local mum who is employing her correctly, paying NI and tax etc. But as I only need 2 days p/w, she has suggested I pay her for these days in cash.

What do you think about this? Are there reasons why I should not? I know she will be avoiding some tax and I guess this is not strictly legal. But it seems fairly harmless for the small cost (£65 per day) and small portion of her fully taxed role.

I do have the option of sending her to the private nursery 5 days but I really think it would be better for my daughter to have some time in a home/outside environment with a known carer too and this seems a good mix.
What do you think?

I would not assist any illegal activity.

she will be evading tax - illegal

I wouldn't do it

why are you asking? i don't think anyone on here is going to recommend you pay cash in hand as it is illegal.

but probably not uncommon.

if your questions is about the mix, then change the title.

No. She shouldn't suggest it - it's unprofessional.

Nope - illegal, and if she's willing to break the law I'd question her integrity generally.

But then I am a tax inspector

You can set things up so that you avoid paying her some tax if you pay her for use of, say, her vehicle. But, you can only do this on some of her payment, clearly. Not her entire wage from you.

As if anyone was going to say "Yeah, great idea!"

nope - why should everyone else pay tax and she gets away?

And to add to all that - if it gets found out you will be liable for the £3k fine and back payment of taxes.

No

Ok got it. I have also been researching this on the net and understand my position better. It seems that I will be paying a tiny amount over the tax threshold limit of £120 p/w so I do intend to pay her NI and tax. I need to investigate registering correctly for this - it is quite daunting!

Ahhh - but she has another job which is using her tax allowance, so the entire salary you pay her will be taxable, not the bit over the tax threshold.

You need to agree a gross salary with her so that you are not stung for all the tax.

You need to have an agreement with her primary emplyer as to who bears the cost of her tax and how the tax free allowance is shared. You cannot assume that the amount you pay her falls within the zero tax bracket as her primary employer will be claiming that. So yes, you do need to investigate this correctly but many companies can do this for you for a relatively small fee.

Not just her that will be in trouble for tax evasion - you would be too

On the days you are using nanny will other child be there too, making it a 'proper' share?

If so what will the contract arrangement be?

If she has a contract with employer 1, and your agreement is with employer 1, then it may be simpler for you to give employer 1 a gross amount to add on to nanny's pay.

If you're using her on a day without the other child then you will need to have separate contracts and payroll. She needs to declare to you that she has another job so you use the correct tax code.

I suspect the rate she is suggest is net (although it sounds quite steep for a nanny share) - £13 net per hour for a 10 hour day? Assuming you both pay £65. That works out to £84 gross.