advice on paying nanny / tax / NI etc...help please!

[timetosmile]

We are looking at employing a Nanny just for a few hours on a couple of mornings while I'm at work (DC at afternoon nursery at school)

We haven't done it before, (and neither has the prospective nanny who works a couple shifts at a local after-school daycare)

Her pay from us would be about £90pw, which doesn't even register on the NannyTax website calculator!

Clearly, because she has another part-time job she may be above some kind of tax threshold, so I needs to know...

What is the weekly gross pay (from both jobs) that would make her liable to tax?

Is it possible to use a NannyTax/other company to sort it out if she has a job elsewhere too?

Thanks a lot!

As you say, due to her having other income she may be over the threshold. Thus why you don't need to operate PAYE if you pay below a threshold AND they don't have another job. In your case, they DO have another job, so you DO need to operate PAYE.

What is the weekly gross pay (from both jobs) that would make her liable to tax?

No idea... don't think it's important for you to know it... as you can't decide not to operate PAYE based on it. You can only not operate PAYE if you are paying below the National Insurance Lower Earnings Limit (£102 per week 2011/12 tax year) AND they don't have other income.

Is it possible to use a NannyTax/other company to sort it out if she has a job elsewhere too?

Yes, any of the nanny payroll companies (do look around as their prices do vary) will be able to run the payroll for you. You could alternatively do it all yourself.

If you are paying £90 per week Gross AND if their other job is using their full personal allowance, then their tax code I think for your job would be BR. Their tax code could be something else though if their other job does not use their full personal allowance.

Using www.mranchovy.com/calc/ with tax code BR there is Employee Income Tax payable, but not Employee NI or Employers NI.

I hope I have this right... MrAnchovy may well be along at some point to correct me if I'm wrong in way.

I would suggest you register as an Employer, let the New Employers Helpline know the situation and be prepared to run full PAYE until you told otherwise by HMRC.

That's really helpful, thanks NN.

So I need to find out what her net or gross pay is currently, and then phone the new Employers Helpline ( I will google!)?

And then find a NannyTax-like company who will sort it all out on my behalf )I just stump up the cash?)

What about insurance as I am an employer, she is in my home etc?

Happy to get helpful internet links as well as advice.

Thanks

You don't need to know their current pay... or have any right to know their current pay in my view.

Get your employee to fill out Section One of P46 (pdf) - that will then tell you for certain they have other income. Then armed with that you can then call the New Employers Helpline to register as an employer, or get a payroll company to sort things out for you.

You could start by calling around the nanny payroll companies and asking them... the one which answers the phone promptly and gives you good advice, is then one you may well sign up with.

Employers Liability Insurance - this is usually part of your home contents insurance. Check your policy. We have heard in the past that Co-Op insurance does not provide this cover. If you are insured with anyone else then they probably do provide the cover, but do check your policy as it is something that may be missed off lower cost policies as a way of reducing the price.

HMRC:P49 talks you through doing payroll. Warning it does seem a bit complex at first read.

As Nick says, it doesn't matter to you how much she earns in her other job, the simple fact that she already has another job means you have to operate PAYE.

And yes, at least initially, her tax code will be BR so tax will be deducted at 20% on all her earnings with you. If she earns at least £144pw in her other job that will be OK, but if not this will leave her overpaying tax. To solve this she can either claim it back at the end of the year and/or ask for her tax code to be split. If you are going to use a payroll company (it shouldn't cost more than £115) talk to them about this.

If you want to save the £115, you will need the following which the payroll company would have provided:

• a contract
• to register as an employer (start here)
• some way of calculating tax and NI deductions - HMRC provide this, although it is not as easy to use as commercial software
• submission of end-of-year returns on line (again HMRC provide a system to do this)
• some way of creating sensible-looking pay slips
• awareness of Statutory Sick Pay procedures