Friend wants to be our nanny - what do i need to do? Who so we need to register with?

[NedSchneebly]

DS starts school in September, and friend in village has decided that she wants to get childcare qualification, and offered to take on before and after school care of DS. She wants to do care at our house.

She is fab, and really want her to look after DS - he loves her! I realise that she'll be our employee, but have no idea who we both have to register with/ inform?

Ofsted?
DWP?
Council?

What is tax liability? She won't be earning over 10 thousand a year, so presume no need to pay PAYE, but NI needs to be paid?

Insurance for her and me?

Anyone got a checklist of what we both need to do?

Please can you help me?

Thanks!!

You will have to pay her minimum wage as a minimum.
Pay her in gross (in case she finds other employment too, putting her over the tax threshold)
You need employer's liability insurance (I think?)
You don't need to tell anyone except your payroll company (i.e. nannypaye.co.uk), assuming you choose to use one.
You need an employment contract, signed by both of you.
Think about all the other costs, too. You should cover any costs incurred during the course of the day, which will obviously be minmal during the school run. But still think about petrol/mileage and any afterschool activities / snacks.

Thanks strix!

Do I have to use a Payroll company? Can she not just bill me every month? Or does payroll company sort out NI contributions?

What does it mean paying her gross? How does that work? How will that affect what i pay her?

Sorry- completely clueless!

She cannot bill you, a nanny would not be self employed in these circumstances. YOU are responsible for tax and NI. Gross means pre tax pay, net means after tax. If you agree net pay you could get stung if she gets a 2nd job, or the hours go up (during school holidays eg) by a much greater hourly rate.

Also, you need to think long and hard as to what you want from her. How will you feel if she does something that you aren't particularly happy with? Eg, if she leaves a mess when she works, or feeds DS late etc. How will you go about telling her you're not happy without endangering your friendship?

Fair points chit - thanks. Just want to do things right by law and fair to her, but don't want to overcomplicate if don't need to!

We're not close mates, as such- just didn't want to describe her as some random woman I know! We've known her for a couple of years as the manager of our local pub. Brilliant with all the local kids, and DS adores her.

I've just done some research on direct gov website and says that if domestic employee earning less than £102 a week, which she would, do not have to pay NI. Therefore, do I still need a payroll company? I am a teacher, so school holidays not a problem, and she's agreed in principle to a term time only contract.

Thanks for all help :)

You don't need to use a payroll company, you can do it yourself. However you may find that you want the advice from the payroll company, their annual fee may be worth paying purely for the advice alone, yet alone them also helping you with any taxation paperwork and producing payslips.

How many hours per week would they be working?
Are they aged 21 or over?
Do they have any other forms of income? Is she still connected with the pub in any way?

You are right about the NI, as it is done per job. But if this is a 2nd job, she will still need to pay tax. If not a 2nd job then she wouldn't need to pay any tax.

If paying under £102 and if she's 21 and over, she could only do up to 17 hours nannying or you would be paying her below the minimum wage of £5.93. If she's 18-20 she can do up to 20 1/2 hours or she would be below the minimum wage of £4.92.

From HMRC website:

If this is your employee's only job and you pay them less than the NICs Lower Earnings Limit (LEL) - £102 a week or £442 a month (2011-12) - you won't have to operate PAYE at all.

If it's their only job and you pay them at or over the LEL but below the Secondary Earnings Threshold for NICs - £136 a week or £589 a month (2011-12) - you won't have to operate PAYE on their earnings but you'll have to keep a record of their personal details, their National Insurance number and the amount you pay them.

If they have more than one job, you'll need to operate PAYE.

Thanks Chit- that's the bit I read too!

She's not connected with pub any more- given it up completely. She'd be working 15 hours a week for us, so would fall below threshold, even when minimum wage goes up to £6.08.... At least I think that's right?!

Will look into payroll company. What kind of fees do they usually charge?

You won't need to do payroll if she's under £136, and if she's under £102 you don't even need to keep any records (but I would anyway). So no need to register with a payroll agency.

Sounds like you will be paying under the thresholds, so just keep basic records. Then if the situation changes at any point, such as if she gets any other income or the amount you pay goes over the threshold, then register as an employer.

Payroll companies typically charge around £120 a year.