Nanny Gross-Net Rate- What shall I do?

[Mozzer123]

Hello,

I have just met a Nanny that I really like. I am looking for her to do 2 days a week ( 18 hours a week in total). She already works 2 days for one family ( I think 20 hours) and 3 hours a week for another. She told me she is netting £9 an hour at the moment. The trouble is this puts this nanny way out of my budget. If I'm understanding correctly, then for us as the second employer to achieve this net rate we will have to pay probably £12 gross an hour. The first family by contrast will only be paying £10.50 an hour as they get to use up all her nil tax bands. Does the revenue give all the personal allowance to the primary employer, or would it be split? I think I know the answer to this.... :-(

Also does anyone have any advice on how I could handle this with the nanny? I'd be able to stretch to £11 gross an hour, but not £12 gross. This gross/ net thing is a nightmare!

Tell me about it. I wish I could tell you how the tax bands are shared out but I haven't a clue. I hope someone comes along to help you soon. I have told all the nannies I'm interviewing at the moment that I will only agree to gross rates. We can talk net rates at interview but they will be paid the equivalent gross rate. Even if they assure me they're not going to work elsewhere.

Yes, net wage agreements are a nightmare, see many other threads here.

Tax codes are only split at the request of the employee, so you could agree a net amount on the basis that she arranges for say 2/5 of the personal allowance to be allocated in the code HMRC give to you (and a default gross amount if that doesn't happen).

But what would be best would be to get her to understand that her first employer is only paying her £10 an hour (in 2011/12 when the allowances go up). You think she's worth more than that - you think she's worth £11 an hour, and that's what you can afford to pay her (gross). Perhaps she should ask for the same (gross) rate in her other jobs, then everyone will be paying her what you think she is worth, but you can't afford to subsidise Employer 1, and why should you?

Worth a try, but fighting the Net Pay ignorance is an uphill struggle.

Headfairy- I agree, I only want to deal in gross
Mranchovy, thanks so much... I think I will have to head down the route you suggest with this. Might even sit her down with the tax calculator and show her! Absolutely I don't want to have to subsidise the other employer ( not relevant at all but I imagine they earn about triple what I do) :-)

Ooh also Mr4anchovy, I was under the impression from ( limited) reading that the employer would also have to agree with HMRC to split the allowance? Am I wrong? Hope so, as there's no earthly reason why they would!

This gross/ net thing is a nightmare!

Oh it's such a pain. I just don't understand why some nannies don't get that it is a real problem for employers, especially when it involves multiple part time jobs.

Think MrA's approach is for the best. Explain to her how much she is actually getting Gross in her main job. Once she can understand that, then you can offer her the same amount, or a bit higher.

Maybe telling her that unless she agrees to the gross wage she won't get the job, will help focus her on the subject matter. Either she want's the job or she doesn't. If you were to offer £11 Gross, the jobs worth £10,324 Gross per year to her.

I would however advise against stretching finances. Have a buffer for things like pay rises and unforeseen expenses that you didn't think of initially.

A number of payroll companies include agreement from both employers in their procedure for helping nannies arrange splits, but this is not actually required by HMRC - as stated on their web site under If you've got more than one job:

"...You'll have a tax code for each employer. This tells them what tax allowances you get. But your Personal Allowance will normally only apply to your main job.

To avoid paying too much tax, you can ask HMRC to split your Personal Allowance between your jobs..."

and under Sharing your Personal Allowance between jobs/pensions:

"... You can choose to share your Personal Allowance across more than one job or pension even if your allowances would normally be used up through the main source of income..."

Note that if the other employer has a net payment in the contract they are going to be mightily pissed off if she doesn't discuss this with them though. And they may have a clause in the contract to protect them.

Thank you nannynick and mranchovy. Nannynick, you are right- need to think carefully about budget as it somehow seems to be getting bigger and bigger. I can handle a bit of an increase for the right person, but do need to be careful especially with mileage etc. The trouble is you just want to find the right person, and find the cost creeping because actually you feel funny even thinking about 'budgets' when in comes to the kids. Even though I've kind of accepted now that I'll be clearing a minimal amount of money from my salary till the children are at school ( and probably after as well!), I still don't want to go into the red!

Mr anchovy thanks for the links and the info- really useful. I think I will just try to explain things to her and go from there. I would not want to piss off the other employer at all. However, I do wonder if the nanny realises what a good deal that employer is getting on her... Just realising now that if you employ a part-time nanny as her first job, that's far preferable. have spent hours and hours researching on mumsnet and elsewhere to make sure I don't cock this up and nannynick and mranchovy your info is invaluable.

Also I've used the fantastic kistax calculator that I think nannynick had linked to before and with the new 747L taxcode from April the primary employer will only have to pay £9.76 gross to net down £9! It's crazy. The trouble is I fear we will start to sound crazy when we try to explain it all, and the nanny will just be like 'so what, I want £9 net! Anyway, thanks again both. Think I need a BIG glass of wine now as all this is rushing round in my head. :-)

MrA wrote the kistax calculator. It's great, much better than ListenToTaxman that I used to use.

The 747L calculation I don't think is accurate yet, due to Naional Insurance rate changing. Think that is what MrA said on another post.

Did you advertise the job at a specific salary?

Kudos to MrAnchovy then...it's a fab tool! Nannynick I did originally advertise at £9 gross per hour but then took it off the ad, to see who else might come through. A mistake I think! Mind you some people still replied when I had it on at the gross figure saying they wanted £Xnet. So it's kind of talking at cross purposes sometimes! I guess it's what the norm is but I am not going to agree a net figure definitely not. Even if my gross budget goes up iyswim.

Interesting thread, some stuff about tax allowance etc I hadn't considered (I'm a nanny). Very useful to me as I'm jobhunting. But one question to knowledgable people- how do you go about finding what your tax code is?

It is usually on your payslip, assuming you are currently employed.
Have a look at tax documents such as your last P60, that might help.

Your last P45.

Also you can contact the tax office and ask them.

Can nannies be self employed and bill clients and sort their own tax out? (And wouldn't that be simpler all round?) If not why not?

Thanks :)

Maidbloke - best to start a new message thread for that.
It has been discussed many times on here, with the conclusion that in 99.9% of cases a nanny is not self employed. Many factors are involved, overall picture of a persons work is looked at. Unlike childminders, nannies do not dictate their hours of work, place of work, don't provide things, don't have financial risks. IR35 also closed a loophole that existed a while back I believe, that did at one time enable a nanny to be a personal service company.

Got ya, thanks nannynick.

Samedi - just realised that you have worked abroad a while. Not sure what happens in that situation, did you pay UK tax or local tax?
Dug out a P60. That document will be useful, it contains tax code, also has a PAYE reference on it, plus your national insurance number. The PAYE ref and NI number would help tax office work out who you are, thus establish your current tax code.
647L is usual for a single person, year end April 2010.

Thanks nannynick, yes I was abroad and currently unemployed so no P60 or anything. I was paying local tax as I was declared as being employed. I'm hoping after my current stint on JSA (I'm doing it to keep up NI, I'm not claiming as I apparently didn't pay enough NI one year) I'll have a P45 or P60 or whatever which will give me the code! I just didn't know if I could find out some other way.

Thanks for advice, and sorry OP for completely hijacking thread!

No problem Samedi-good luck with your job hunt.

maidbloke- re self employment I think one of the markers is 'right of substitution'- having the ability sending someone in your place to do the job. With a nanny, the hirer is hiring 'you' specifically, setting your hours and dictating that you need to be in a specific place at a specific time.

nannynick- I've been mulling on this last night and this morning. I am going to have to offer a gross rate to nanny £10.50 an hour. If she can't do it that will be it because I can't go any further. That gross rate is still going to be more than her other employer is paying but I have a feeling that it's not going to fly.... maybe back to the drawing board. :-(

£10.50 gross per hour sounds reasonable. If she won't accept, consider other applicants.

Samedi you were in Paris? If so you WEREN'T paying local tax, you would have been paying social security for healthcare, unemployment, pension and other deductions. Income tax is done on an individual basis and you'll be sent a letter (or they'll try to send you one) asking you to pay 2010s tax this September/October because tax is not deducted at source by the employer, it is the responsibility of the individual because it's done on total income including dividends, private pensions etc. PITA to add up but different things are taxed at different rates, partly depending on where you live, and if you're 'en couple' or have a child you get additional tax breaks.

Net in France (as opposed to brut) is net of the social charges etc. As you've left France you should have informed both the CGSS and the tax office, the first so they can transfer your entitlement to benefits etc (your social security payments are transferrable and count as British NI contributions, v useful in terms of qualifying years for pension etc) and the second so they can tax you. If you don't and you ever want to return to France to live or work you'll find yourself with an assumed tax bill plus interest, unless you were earning over ?60k in which case your tax bill would be about right.

That said if you earned under ?5k you pay no tax but I imagine if you were a FT nanny you were paid more and your employers declared at least the SMIC.

Btw I didn't get a message from you about the French police check form but preg brain means I can't remember if you sent it or were going to send one if you needed it!

Sorry OP!