question re grossing up salary

[goingbacktowork]

This is a question about grossing salary up. I have read everywhere how you should put a gross figure in any nannies contract. Well my nanny wants [x]amount an hour net and a minimum of [x] net a month. How do I work this out as an exact gross figure for contract purposes? I am not sure I have explained this that well!

Do you know their current tax code?

If you agree a Gross salary, is your nanny aware that when their tax code changes, their net pay will change. This can work to their advantage, such as when tax free allowance increases, their take home pay goes up as less is paid in taxes. It can of course also go in the opposite direction.

If you don't know their tax code, use 647L which is the typical tax code.

calculator.kistax.com will do Net to Gross calculation.

thanks. From what I have read the gist is that due to the tax variations you really SHOULD ALWAYS pay gross.

Is the following normal? I think that the nanny tax calculators work out gross payments based on the maximum single persons tax allowance. Is it correct that if the nanny has used up say half of her personal tax allowance on earnings to date that I can only use the other half of the allowance on my salary payments thereby it costing me more (as she (for which read I) would have to pay higher rate tax on a bigger proportion of her salary then she otherwise would do?) This seems a bit wrong to me. Not sure how I sell this to the nanny though if she needs x amount in her hand per week/month? In any event I am assuming I wil need to see some paperwork from her about earnings to date - say a p45 from last employer even if several months ago. I assume nanny tax agencies do provide these when a nanny comes off payroll?

I don't understand what you are saying about using up the personal allowance.
The taxcode splits the allowance over the financial year as I understand it... so if in their last job they were on 647L then it won't have used up all that amount in the first 6 months.

Yes, a P45 is needed ideally to show deductions made to date, plus taxcode. A nanny payroll company will provide one to a nanny leaving a job. Though if they don't have it, you use a P46 which depending on answer to the questions on it, will determine a starting taxcode.

Could you not just tell your tobe nanny that salary is x gross per year... and let them decide if they want the job or not? You could say that at the moment it is about x amount net on 647L taxcode.

If they really really must have a Net salary and you still want them to work for you, use a payroll company to do the figures. Be prepared that your costs will be a bit unknown as you do not know the nannies financial situation - they may be repaying money (back taxes, student loan) via the taxcoding.