Another Gross / Net for second job question

[Sullwah]

My lovely nanny is pregnant and due to leave in the next couple of months.

I think I have found a replacement for her ML from the DTs nursery

She wants £10 net per hour for what will be a 12 hour a week job 12pm to 6pm twice a week (my nanny does 8am to 6pm twice a week - but for the maternity cover, I could do drop-off so only need someone after 12pm IYSWIM).

I have looked at Nannytax to get an idea of the calculation - but it assumes that the Nanny only has one job.

How do I convert £10 an hour Net to a Gross figure for a second job. Any idea?

I am guessing that even for 12 hours a week I still need to pay tax and NI? But happy to stand corrected!

My employers run a nanny payroll - so I will be using them. And I can't really ask them to do the maths for me. They just want to know monthly gross figure.

I nannied before I had my son. From what I can remember you will need to pay a higher rate of tax as it's your nannies 2nd job so she will be working more than just the 12 hours that you employ her for. I think the higher rate is 20%. The best thing to do is call nanny tax and speak to someone personally they should help.

Nursery nurses are usually pretty clued up about Gross wages, as nurseries pay Gross. So I don't know why she is asking for a Net wage.

Please avoid using lookup tables in this situation. As you have correctly identified your nanny is/may have another job.

You don't know what her tax code will be at any given point

That is true for ALL jobs. While a person with just one job could be assumed to have a tax code currently of 647L, it may not be the case.

So... in this case, use a Net to Gross calculator to work out the Worse Case scenario. Which is taxcode: BR - which means the entire lot is taxed.

She wants: £10 x 12 = £120 per week. Enter in £120 in the Net per Week box.

Enter in Days: 2 Hours per week: 12
Taxcode: BR
Click Recalculate.

Currently, it calculates at £680 Gross per month. Employers NI is £26 per month.

In April, tax rates change. So the figures will be different then. They can also vary slightly month to month when a payroll company aims to get the same Net figure.

So... you need to agree a Gross wage with your nanny. Not NET. Then it keeps it as simple as possible and any payroll company can deal with it. Not sure why you want to use your employers payroll company specifically - assuming they are charging you a fee for using them, I'd suggest shopping around for a payroll service.

So, if you are wanting a Gross Per Hour figure, then £13 Gross per hour is closeish to £10 Net in this situation.

£13 gross as we have discussed on a recent message thread, is quite HIGH for a nanny. Though you are only wanting part time hours, so that does tend to come at a bit of a premium. Are you London based?

Oh, YES you will need to operate PAYE as per how you did for your nanny on ML. Reason being: the amount being paid is above the earning limit. It is also their second job (have they completed a P46 to inform you that it is their second job?)

Hi just to let you know all nannies work in NET terms...don't ask why but that is just the way it is done and has been for the last 15 years that I have had nanny experience.
£10 an hour is a fair amount to pay a qualified and experienced nanny. Plus you have exclusive one on one care for your child....as you already have a nanny you will already know this.

alipalie - please read other threads on this board. Professional Nannies for many years now have agreed Gross salaries. It is Agencies who are often responsible for Net pay (not all agencies, some advertise jobs as Gross).

We discuss this subject on a regular basis on this board... even earlier this month - see here.

On Mumsnet, we talk in GROSS terms as anything else is confusing for parents. A parent considering employing a nanny has no idea how much that nanny will cost, if that nanny wants to be paid NET. The difference between a NET wage and the Gross (plus Employers NI) can be considerable.

If she is coming from a nursery she will be on gross. Just ask her to keep it that way

It is London - and absolutely EVERYONE seems to want £10 net. So I was not surprised when she asked for this.

NN - my employer offers nanny payroll as a "perk" - so I don't have to pay extra for this.

And although we on MN know that we have to pay tax - lets all admit that there is a huge amount of nannies out there who are paid cash in hand. I would even speculate that it is the majority (impression I get from my previous gumtree ads).

But that is by the by - I have every intention of doing things properly.

London at times seems to be a law unto it's own. NET wages do seem common there (I do wonder how many of the 69% of nannies surveyed by Nursery World/NannyTax who said they were paid Net, were from London), I don't doubt that Cash only happens, or that illegal immigrants are employed, or worse kept under lock and key in the basement - wasn't there something on TV about that quite recently?

Anyway... as you say that is by the by... you will do things properly. So the job applicant will get paid Gross if they like it or not. You will just try to get it as close to £10 net as you can.

Nanny Payroll as a Perk. Not heard of that one before, sounds useful though. Do they pay recruitment fees as well?

nannynick-this is obviously a subject you feel passionate about.
Having been a professional Nanny myself for 15 years I can only give advice that I myself have come across or experienced. I know many nannies, none of which were kept in employers basements or illegal immigrants, and they are all paid in NET. Maybe you don't talk in NET terms on mumsnet but in the real world nannies do.
Thank you for your advice on this subject it has been enlightening.

I would just add to ali's experience.

All the nannies I have ever interviewed have talked in net terms and I never used an agency. Gumtree or word of mouth.

And none of them have been illegal immigrants. All have been British or from the EU and are perfectly entiitled to work here.

Net to gross calculations are not simple, and they can't be done on a per hour basis because the allowances are calculated on a weekly or monthly basis. So the answer is going to be different in the first month (unless she is paid for the whole month), and also change in April with the new tax year.

The one sure thing is that as she has another job, she will pay tax at 20% on the whole of the gross amount you pay her so she is going to work out expensive.

The argument about net vs. gross is discussed fully elsewhere in this topic, but I agree with Nick, nannies asking for net pay rates belongs to another era - an era when the working environment was simpler and people didn't have two or three jobs. It's time for a change.

I'm a bit puzzled about your employer's payroll perk, unless they are a firm of accountants or a payroll bureau that is used to running separate payrolls for many different employers - particularly with SMP it would be a nightmare to administer this unless you did it as part of your business anyway. If they do run a payroll bureau, they are probably using software that can cope with a net salary: have you asked them?

In the real world many nannies talk net but have gross on their contacts and more are getting much more clued up on this (see nanny messageboards for evidence). Everyone is, at the end of the day, paid net. If nannies are properly employed, however, they will also be paid a gross amount, shown at the top of the payslip before tax and other deductions. If they are not, they're working illegally regardless of whether they are illegal workers (people without the right to work in the UK).

What I suspect you mean to say, rather than stating nannies are paid net, is that nannies negotiate net.

Negotiating a gross wage for a PT job is the only sensible thing to do. I would set a gross wage and tell her it comes in at £10 net on a normal tax code.

Really if nannies want to be taken seriously they have got to start talking gross regardless of what we did in the good old days when insurance wasn't necessary either etc.

You could use the hmrc tax calculator. It's available as a cd and may be on line.
If you use BR as her tax code it will tax it all at standard rate and this assumes she uses all her personal allowance in her other job. You will also need to include the ni deduction which will make it slightly more complicated. However by tinkering round with the gross rate value you could probably get close to gross figure to give a 10.00 net rate to base your contract on.
However unless you are really competent I would get an agency to do the actual payroll and tax as it's going to be complex due to her this being a second job.

alipalie - in your 15 years of experience, have you (and all your nanny friends who talk in net) ALWAYS had tax and NI paid on top of your agreed net?

In 6 years of interviewing many nannies and hiring several, I can say that that doesn't appear to be usually what happens. Talking about net pay seems mostly to be a way of saying in code: we'll do this cash in hand.

Novstar-Yes thanks I have ALWAYS paid all my tax and NI and it offends me when people (often) suggest otherwise of this profession. I wouldn't dream of suggesting to someone else, in any other profession, that they have tried to dodge paying their taxes...it's just rude.

Unfortunately nannying is one sector where cash in hand is notorious....

... and it's not the nannies that dodge the tax, it's the employers.

I would say that 50% of the nannies I have interviewed over the years have been paid cash in hand and know their employers are not paying tax and NI.

Of those that have thought their employers were paying tax and NI, 50% of them have not been able to get a P45 out of their previous employer which usually means they have not been paying tax and NI.

alipalie - As an employed nanny, your tax should be paid for you by your employer. I wasn't suggesting it's nannies who are not paying tax. It is the employers' responsibility to pay the tax + NI and they are the ones who are usually happy not to pay it (not to say that some nannies don't go with it).

Have you never had builders/plumbers suggest to you that you pay in cash to avoid paying VAT?