Can the nanny pay their own tax?

[WildEepsMomNDad]

I know there's a lot already on here about taxes - but wasn't able to find this specific answer.

My nanny-to-be wants to pay her own taxes. I was wondering, if this is stated in the contract and I pay the employer's NI contribution is this ok? I looked online, and it appears that I should be paying all the taxes (including the nanny's portion) and then giving her the net amount.The draft contract we have (not yet signed) states what the gross salary would be (not net).

I'm going to be talking to her about this this week, so any advice would be helpful.

Why does she want to pay her own taxes, unless she's self employed?

I don't know - that's one of the things that the talk this week is about... I don't want to get involved in anything dodgy. However, I know her husband has his own 1 man company - so benefit of the doubt, maybe she wants to route it through there for tax benefits.

Not possible to my knowledge.

Ask yourself WHY a nanny would want to pay their own taxes... what benefit does that have?

Would the nanny be classed as self employed when doing the job? It isn't very likely in most nanny jobs due to the nature of the work.

By agreeing a Gross contract, the nanny is in effect paying their own taxes... as the income tax and NI get deducted from their Gross salary. It's just that the Employer keeps that money and transfers the payment every 3 months to HMRC.

i don't think so

you are her employer therefore you are responsible?

anyway, as far as i am aware a nanny cannot be self employed

I use a payroll company and i set aside the moeny each month for the Tax and NI for my nanny so when the quaretlery demands come i have the money ready

The only nannies I know that can be self employed are maternity nurses on very short contracts.

My nanny wanted to change to be self employed and i just asked her to phone inland revenue and they explained she couldn't be self employed.

I guess on the flip side, if the nanny keeps the money / sets it aside for the quarterly payments - then they could use the money for other purposes until its due... but opens up the possibility of the money not being on hand when its necessary.

I was just checking if this was a common request or more trouble than its worth (for me).

Can't route it through a company to my knowledge. A loophole regarding that was closed many years ago.

What is the intention of the relationship? I expect it is that you want to be calling the shots, you want control.

Are you offering work, and the contractor accepting it, on an ongoing basis?

Do you have control over the hours being worked and the tasks undertaken?

Do you require the contractor to do the work personally? (i.e. he or she cannot send a substitute)

I expect the answer is YES to all 3 of the above. Thus very unlikely in my view to be considered by HMRC (and tribunals) to be self employed.

However, it determining these things isn't as simple as saying Yes or No to a series of questions.

A recent case involving an IT contractor is worth a read for anyone interested in this subject area:

Novasoft Ltd v Revenue & Customs (Apr 2010)

So you really don't know for sure until it goes before a tribunal.

Are they wanting things like Holiday?

The risk is that she doesn't pay her taxes. Then you are deemed to be paying her the gross amount as "net" and will be liable for higher E'er NI on the higher figure.

You will also be deemed her employer and could get in trouble for not paying her e'ee taxes over. I don't see how she could anyway - HMRC would probably be mightly confused!

I do what ruby does and can recommend it - it's easier for you and the nanny!

why would the nanny want to do this?

that means she is se and would lose many benefits such as paid holidays/smp/sick pay etc

also means she couldnt be your nanny as YOU would be liable for the tax

It's not up to the nanny to decide that she wants to be self-employed in this instance. If she is coming to your house on set days to do set hours of work at your request, then she has to be your employee. If HMRC find out that you are not paying her taxes, they will fine you, not her. The nanny may think she can be self-employed because of her experience with her husband's company or she may have no intention of actually paying her taxes from the gross amount you give her (sounds harsh, but I can't imagine what the benefits to her would be of being s-e in this instance. She will not, e.g. be entitled to holiday pay or sick pay from you).