Paying the Nannie's NI and tax

[TheGoddessBlossom]

Hi all.

I was informed by a nannie I interviewed that nannie's are not allowed to be self employed and I, as her employer would be responsible for paying her NI and tax. How complicated is that in your experience, and what sort of sums are we talking about regarding NI?

Thanks!

Bloss

The easiest thing is to pay a specialist agency to do this.
NannyPaye (I use) and Nanny tax are a couple of ones. It costs about £200 a year and they do all the payslips and HMRC management - and just send you a quarterly bill with NI and Tax detailed.

Nannytax (I think) has a calculator on its website so you can work out how much gross pay would be from net.

And no - nannies are NOT self-employed as a rule - childminders are. They would probably be able to be self-employed if they had more than one employer but it would be against HMRC rules for someone to be self-employed with only one client / employer.

Thegoddess, the nanny is quite correct although you will find nannies who try to persuade you that they can be self-employed. There are lots of agencies who will do the work for you, although I believe it is not that difficult to do it yourself (but you do then need to be organised enough to make the payments to HMRC at the correct time!). I also use NannyPaye and they are very helpful in answering all your questions at the beginning. You do realise also that as the nanny's employer you will need to pay her holiday pay?

There are certainly people who do not pay their nanny's tax and NI, although not many who would admit it on here, but as the employer, HMRC will come after you, not the employee, and can impose hefty fines on you. You also have to ask yourself if you are fostering a good employer/employee relationship if you are not being honest in relation to the person you are employing to look after your most precious children?

Nanny is correct. You are responsible for deducting tax and NI from her gross wage and paying employer's NI. And you can outsource this to an agency if you choose to.

Have you been negotiating salary in net or gross terms? How much would you be paying per week if you've been talking net? Does nanny have another job or is this her sole income? If it's gross then her tax and NI makes no difference to the figure you've discussed but you'll need to factor in employer's NI on top.

As an employer you will also need to have a contract, be prepared to administer statutory sick or maternity pay etc, give paid holidays and hold employer's liability insurance (many but not all household insurance policies have cover suitable for domestic employees, check with yours).

Even nannies that have more than one job would not fufill the HMRC criterea for being self-employed, unless they were working on an ad-hoc basis for lots of employers, like a maternity nurse.
www.hmrc.gov.uk/employment-status/index.htm
I've always done the tax myself.
There's not an easy way of working out gross salary from net, but for example if you've agreed to pay your nanny £10/hour for a 40 hour week her gross salary will be £522/week, net (take home) £400. So tax will be £75.65 employees NI £46.02.
Then on top of that you need to pay employers NI of £53.33.
The situation is even more complicated if she has more than one job as she will need to split her tax code - each person get a tax free allowance each year.

Easier to contract it out to a payroll company - they charge varying amounts, so shop around. www.payefornannies.co.uk does mine and my boss seems happy with them.

www.mranchovy.com/calc will give you an idea of the amount of Employee tax and Employee NI you deduct from their pay, plus Employers NI which you pay.

Negotiate Gross salary with nanny, then any tax code changes are not so much of an issue for you, as tax codes change how much tax is deducted.

Little concerned that you didn't know about this before deciding to employ a nanny, as not knowing about this may also mean you don't know about other employment related matters. You will find lots of info on here about nanny recruitment, including links to template contract.

Let us know more details about the job if you need any specific help, as it can be of help to know working hours/days as some entitlements are based on that such as holiday entitlement.

At last a thread where parents can see that Tax & NI has to be paid by the parent & that its illegal if they dont do so.

I always make sure that I ask if Tax & NI is going to be paid before applying for a job.

Ive found that alot of parents say they will not be paying it.

Also that there wont be a contract.

Im sure that if it was them applying for the job they would want a contract & Tax & NI paid.