Is this a legal way of not having to pay nanny tax out of already taxed income?

[GoldysMum]

I'm sure there are lots of reasons why this wouldn't be allowed and haven't even discussed with dh yet. My thought is that as DH has his own business, perhaps he could put our nanny on the company payroll. He could then lower his own salary by the exact amount of the nanny salary and then that money would only have to be taxed once? Am I being very naive? Hit me with the reasons this isn't possible?

But nanny will also have her own allowable expenses. Get advice!

hmmmm

You need MrA

What would nanny be doing for the company? Unlikely that the company needs childcare, so what would the job be?

I think that this question has been asked before, and that it cant be done. I think that part of the explanation for why not was that it could only be as a creche available for all employees? Hopefully someone who knows will be along soon!

you wouldnt be the first nanny employer to pay your nanny via your own company.

I have been paid like that in the past.

Not sure how legal it is, but so long as my tax /ni was being paid and i had pay slips etc etc (as i did) i cant see how anyone would find out.

5 Apr 2010 - Mranchovy gave a reply to a very similar question.

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Though officially you cannot do it through a company you could employ the nanny as a cleaner / cook / whatever and unless someone really had it in for you, you would probably be ok.

Whether you view the tax saved as worth the risk is a personal choice.

I often come across this where people new to having their own company think that it is all free if going through the company whereas it really only saves the tax which would otherwise have been paid.

I was emplopyed as a PA once and got paid through their company. I was their nanny.

i was also under a db company once as a pa - i did personally assist dad as if i didnt turn up, he couldnt go to work

i still had all my tax and ni paid properly

The nanny isn't providing nannying services for the company though. He/she is providing nannying services for the parents. It doesn't work as you'd like it to, unfortunately.

No. Even doing it via a company doesn't get you out of paying over the nanny's tax to HMRC and paying NI yourself.

I'm not sure why it matters that they're being paid out of your post tax salary. You're not being taxed "twice". They are different taxes. In the same way you pay tax on purchases (e.g. VAT on petrol or clothes).

i was also under a db company once as a pa - i did personally assist dad as if i didnt turn up, he couldnt go to work

All joking aside, this kind of arrangement is illegal and by cooperating with it as a nanny you may be charged with conspiracy to fraud :(

Pay the tax. Your country needs it.

In my defence (and parents) it was 12years ago - maybe tax laws were different

'hopeful eyes'

My tax etc still got paid so why illegal Mr A?

Years ago there was talk about nannies being made into a company to save employers tax - I never did that - but my friend did

It's illegal because the nanny is NOT an employee of the company really, is she? She's a benefit to a particular person, eg person X. You can put the nanny's pay through the company, but the person who gets the benefit, person X, would then need to pay tax on that money (eg, on £25,000 or whatever) because they are receiving a benefit in lieu of pay - just as you would need to pay tax on childcare vouchers over the amount the Government allows you to get tax free. So income tax still needs to be paid by person X on that money, and then the nanny needs to pay their own income tax on the money, therefore no financial saving and little point in putting it through the company.

(Hope that's clear!!!)

About 8yrs ago, (as blonds has said not sure if employer/tax laws have changed since then) I worked for a family and was paid through the company books. The company business address also happened to be home address. The main bulk of my contract/job description were nanny duties, but it was written into my contract that I needed to be available to send/receive business related documents - which did happen occasionally. Not sure if that was legal?

In my defence (and parents) it was 12years ago - maybe tax laws were different
No I'm afraid they weren't :( HMRC would have to believe it was a major fraud to go back more than seven years though

My tax etc still got paid so why illegal Mr A?
Because the company is providing a taxable (and NIable) benefit to the director/employee without decelaring it for tax. If you were employed by the company as a nanny you would have a defence against conspiracy because you would have had no idea whether the company was declaring it or not, but if you are doing the duties of a nanny but you have signed a contract saying that your duties are those of a PA it would be difficult to establish that you were not 'in' on the deciept.

Years ago there was talk about nannies being made into a company to save employers tax - I never did that - but my friend did
The loophole was closed in 2003: there was indeed a tax saving for the employer but this was hugely detrimental to the nanny's rights and so no responsible employer or well-advised nanny would have entered into such an arrangement.

You see PickleMyster was in a different situation. It may well be that her employer only claimed a fair proportion of her pay through the company so it could be all above board (I wouldn't place money on it though ).

Oh and just to set others minds at rest, if a nanny is working for an employer who runs a small business it is quite common and perfectly OK for the nanny to be paid through the business payroll with the accountant recovering all of the nanny's salary and PAYE from the employer. This makes more sense than employing a separate payroll company to do it.

The acid test is whether the contract says she is employed by the parents or by the business - if it is the latter you should be asking a lot of questions.

Ok, didn't think it would be legal but had to check - Dh wasn't very keen on the idea when I mentioned it to him either - thanks anyway :-)

I too have been paid through an employers company and and by their accountant, on more than one occasion but my tax and insurance have always been above board so I'm not worried at least I got regular payslips and p.60s and the employer didn't make a mess of it as often happens.

I actually wish the law would make employers use an accountant or payroll company.

They're moving towards this with Real Time Information, although you will always have the option of doing it yourself otherwise it would drive employers towards the black economy which would be counter-productive.

I think the biggest incentive to use a payroll agent for small employers, particularly nanny employers, has been competition. 10 years ago there was only one company that operated nanny payroll and it cost more than a week's wages. Now there are many - well a large handfull anyway - and it can cost little more than a day's wages.

I was paid via my boss's company. No idea how but is was a film company which maybe had a broad spectrum.