Is it risky to not pay nanny tax for a month or so?

[Gangle]

I've recently found a new nanny to look after DSs, 2.9 and 9 months. She was via an agency and I of course have every intention of paying tax and NI on her wages in the long term. However, she is French and hasn't been in the UK for very long. She isn't Ofsted registered but is getting registered now at my request. She also doesn't have a bank account (???) and so has asked to be paid in cash twice a month. I'm don't mind doing this for a month but long term it'll be a pain in the neck and I would rather just pay her once a month direct into her bank account like I did with our old nanny. I've given her a draft employment contract but it just occurred to me that maybe I should hold off signing until I know the Ofsted registration is underway. I know that I need to give her an employment contract within a month of employing her although the question arises of when did I start formally employing her. I have used her for various trial days in December and she has probably worked about 2.5 weeks in total. I could probably get away with not signing the contract until end of Jan so am I ok to pay her in cash in January and not pay tax and NI on this amount? I know it's a risk but it seems fairly low if we only start formally employing her at the end of Jan.

See HMRC: PAYE - Register for details of when you have to notify HMRC that you have employed someone.

You don't pay HMRC every month, they take payment quarterly.

Does she have a national insurance number?
Applying for a National Insurance Number

Not sure what you mean by 'ok' and 'risky'.

It is an offence not to operate PAYE when you are required to do so. A signature on a piece of paper makes no difference, if someone works for you as a Nanny they are an employee and you are required to operate PAYE.

If she hasn't worked in the UK this year there probably won't be any tax to pay in 2010/11 anyway (there will be NI).

As nick says you don't necessarily pay everything at once. Put the money to one side, get the whole process underway (with contract which specifies she must start the registration process and continued employment is conditional upon registration) and pay her net in cash if necessary. If she's not been here long setting up a bank account and NI number can take a while but you should still deduct on her behalf and pay when you can. She can get a temporary number - they used to be very simple to do but I won't tell you how in case the regulations have changed.

I wouldn't assume she'll pay no tax - if she gets a rebate she'll be told about it - so if you're doing PAYE yourself deduct as normal, if your using a payroll company this is what you pay them to sort out.

Trial days I don't think count as formal employment so I woukd date the contract from when she started FT.

Sorry, didn't mean to suggest that you assume she has no tax to pay, what I meant is that in the circumstances described the PAYE calculation, properly operated (either by the OP or by a payroll agency), is likely to result in no income tax to be deducted through PAYE in 2010/11.

She is unlikely to use up her tax allowance before the end of the year, so tax will be minimal, if any at all.

But you are MAD to not account scrupulously for all of this. If you fall out with the nanny and she shops you it is YOU who gets fined and taxed, not her.

You do need to get an NI for her though - call the tax helpline and they will help on both parts (they are actually quite nice on the other end of the phone about all of this)

glad you have found someone :) after your last cock up with the nanny not telling you she didnt want your job

if she is french does she have the right stuff to be ofsted registered,ie

first aid
qualification/common core skill
crb
nanny insurance

getting registered may take 3 + months

i think on another thread there was a clause put in the contract that if not registered by a certain time then the job offer wouldnt stand

Agree with other posts , just adding that we have just emplyed a new Nanny (started yesterday whooohooo!) and she is also in the process of being OFSTED registered. We did discuss this with her at the interview as financially being able to claim childcare vouchers for me and DH is quite important so we needed Nanny to e OFSTED registered. We have also put a clause in her contract - which we signed in December- to this effect and we are hoping registration will go through soon, although also realise we will have to pay probably first couple of months without vouchers ( but still through PAYE and with tax/NI taken into acocunt)
Our Nanny is English though so your situation is more complex....
Good luck with the new nanny anyway!

If she is French and has an employer there 'should' be no reason why she shouldnt be able to have a bank account straight away?? Depending on the bank she may need a letter from you as her employer.
I would make sure you go by the book on this one...all sounds a bit dodgy to me!