What do I pay my PT nanny?

[staranise]

Hi, I've jsut starting using a PT nanny - roughly 12 hours a week spread over two days, with the occasional extra hours. SHe will earn jsut over £100 a week.

What else am I liable for? Looking at the nanny tax sites, it doesn't seem I have to pay NI, tax etc - can that be right? Do I still need to register?

She does work for another family three days a week but not many hours - jsut school drop off and pick up - does that make a difference to what/how I pay? I'm paying £9 an hour BTW.

Thanks for any help you can give.

Has she given you a P45 from their last job?
If not, then may be best to assume that another employer has that... so you will need to register as an employer and get her to complete a P46.
Lower Earnings Limit for NICs for 2010 tax year is £97, so if paying that or more there will be some additional costs, though not much.
Try using calculator.kistax.com with taxcode BR to see some example figures.

The tax system does not cope well with multiple jobs. The latest issues in the news at the moment are due to the system not being able to cope well when someone has multiple incomes. Maybe a new system will be devised, meanwhile stuck with PAYE.

Thanks for that - according to the site, I should be paying her an additional £24 a week in income tax, but surely she earns less than the personal tax allowance and therefore doesn't pay anything?

I should add, I have very little idea of how tax works in relation to employees (Im self-employed) so please excuse my ignorance!

I will have a look once back from the Gym. Expect it's National Insurance rather than income tax... plus Employers NI. Shouldn't be much though as you are not paying that much above the £97 threshold.

At £9 per hour gross, 12 hour week.
Gross Annual: £5631
No Income Tax, No Employees NI, No Employers NI.

If they have another job and their personal allowance is used in the other job... then
Taxcode BR
Gross Annual: £5631
Income Tax: £1126
No Employee NI
No Employers NI

The Income Tax is a deduction from your nannies wage, so you deduct if from their salary and pay it to HMRC on their behalf.

If all of their personal allowance isn't being used in their other job, then they may ask their tax office to split the tax code. Don't know how often that is granted... but if it is then the tax office gives you a different code to use... which could then reduce the amount of Income Tax deducted.

MrAnchovy is your best bet for advice on this, he knows all the ins and outs.
Also nanny payroll companies are often happy to give some free advice, so give them a call and ask about doing tax when you are paying £11 a week over the National Insurance Lower Earnings Limit.

If you are using a BR tax code in that tax calculator then it is assumed that she has other income and the total amount you are paying is due to be taxed.

A Br tax code "Is used when all your income is taxed at the basic rate - currently 20 per cent (most commonly used for a second job or pension but may also be used if you?ve started a new job, don?t have a form P45 and haven?t completed a form P46 before your first pay day)" Taken from here.

Whether her earnings from her employment with you need to be taxed depends on whether you or her other job is her main employment. If she is earning £100 a week from her other job and £100 from you, then her weekly income is £200 and tax will need to be deducted.

Cross posts with Nick

Ah right. I have no idea how much she earns elsewhere but I know it's not cash in hand etc and the other employer pays her NI etc. Many thanks for all the advice, that's very helpful.

If she has another job, you do need to register for PAYE. When she starts with you she will be given the BR tax code. This means that tax will be deducted from all of her earnings with you. You don't have to get involved with how much she earns in her other job.

If she earns less than £124 a week in her other job, this will leave her paying too much tax (this is exactly how the current HMRC problem has come about). There are a number of ways for her to sort this out with HMRC, perhaps best for her to give them a ring and give them the details.

I'm sure she earns less than £124 in her other job - I will speak with her and sort it out. What a mess! Thanks again