Net vs. gross for pay

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Dear All

Forgive my ignorance but am in the middle of trying to sort out payroll and a contract for a new nanny and am interested as to why it's so important to agree a gross rather than a net salary.

Our nanny has given us a net figure but I've worked out what the gross for that would be and am going to put the gross figure in her contract as I understand that's the wisest thing to do. Is it just because if tax allowances etc. change you could suddenly be paying more as an employer?

I cannot believe I am actually genuinely interested in the workings for the UK tax system!

TIA

HB2

There are a variety of good reasons why you want to agree a gross salary e.g. if the nanny has another job in which she is already using up her tax free allowance for the year, you will end up paying more tax because you will be paying tax on potentially every pound she earns with you. Also if there is a change in the rates of tax (e.g. the Government lowers the point at which you begin to pay tax) this will affect the nanny not at all as you have agreed a net amount in her contract and she will expect to receive that amount and you are the one who will end up paying more tax on her behalf.

To add, any deductions made at source would also be for you to pay if a Net salary was agreed. This can be things like paying back overpaid tax credits, paying back a student loan, paying some types of court fees.

The disadvantage for the nanny in you paying Gross is that their montly pay will differ a little on occasion, as adjustments are made.

They do get an advantage though, if personal tax allowance goes up, then they get more take home pay as less is being taxed.