Can my nanny be self employed, or do I have to employ her??

[AlwaysOneMissing]

A family member who is trained and working in childcare, has agreed to be our nanny.

However, we both feel it would be easier if she were to be self employed, with us just paying her an agreed gross wage, and she sorting her own tax and NI payments.

Is that allowed?

TIA

No. HMRC have very clear guidance on this if you Google.

No

no unless she registers as a childminder and looks after the DCs in her house

No.

No. And if you went down this route and HMRC in vestigated this at a later date, it would be you that would be liable for the £3,000 fine and back pay of tax.

Oh!!
Thank God I asked here!
Oops, I had no idea about that. She works in childcare but has never actually been a nanny before so we were not aware that we would not be allowed to do it that way.
Can I ask why?

the reason is you will be her employer. you will tell her what times/ hours/pay she receives

the difference with a childminder is that they can say they will have your child between x and x hour, and they tell you how much you will pay etc

the first means you are in charge, the second means they are in charge

(above is in simple terms only!)

Could she not be a childminder for you instead? She would have to work at her own home, not yours, and as far as I know family members can childmind without being OFSTED registered? But might depend on how close a relative she is!

A childminder will have to do training/ have house checked by ofsted, ofsted registered, adhere to early years curriculum etc..

I don't think that applies if only minding a relative. Might be wrong but sure I have read that on mumsnet.

I think that if you are a paid childminder you must be registered even if you are looking after a relative.

Thank you so much for all your replies - they have been invaluable!

After some googling, I now understand how my nanny will be employed rather than self employed, so I will go through the correct procedures to pay her tax and NI.

Her house is not really suitable for childminding, and I specifically want DC to be at our home (long hours and quite young baby, so better in our own home).

Thanks again for all the posts.

And forevergreek thank you for that explanation - makes it very clear and simple to understand!

Mumsnet guidance must need updating then as it says

You are allowed to pay a family member to look after your child in your own or your relative's home without that family member being registered as a childminder.

www.mumsnet.com/jobs/childcare-by-a-relative

Family member probably should say Relative and define what a relative is in terms of childcare law.

Being a relative does not change employment or tax law. Employment status is determined by various factors and 'big picture' of overall work.

AKiss - a relative does not need to register as a childminder but they can do so if they will be caring for non related children in addition to relations.

All these different rules and regs make it a bit confusing!

We don't want to make an enemy of HMRC though so I will look into how to pay her tax and NI as get employer. It just seems a bit scary and official though!

Thanks so much for all the advice.

You an always pay someone like nanny paye if you can and they will sort everything needed for you

As others have said nannies can be SE and work for one family - only way they can is if they work for several family's and temp / ad hoc / night nannying etc - but that's still debatable depending who you talk to at the tax office

Tbh anyone apart from nannies it seems can be SE so if someone actually gets a gross wage and wants to pay tax - ie a cleaner or gardener etc - then surely better to let them be SE then just fiddle it and get cash in hand

Can't not can be SE - bloody iPhone correcting my text

Yes Blondes, I'll admit I don't really see why working for one family means you can't be SE.

forevergreek I have heard the nanny pay system mentioned on here before. Do you know roughly how much it costs?

Apologies - I have another question...

If my nanny becomes pregnant and has her own baby, what happens about maternity leave/pay? Would we be expected to pay her maternity pay?

Because working for one family (or even two with a share) establishes an employment relationship. There are several factors that are considered when determining what is an employee relationship although none is more significant than others, they have to all be considered together. Three arguably important ones in a nanny relationship are:

Economic dependence - ie your nanny is dependent on you for her income

Control - you are the boss as the employer. This prevents your nanny having the right to take on care of other children without your permission for example

The right of substitution (for SE) - this means your nanny can tell you that next week instead of her coming to provide childcare her friend, who you have never met but your nanny judges to be a suitably qualified, will be coming to look after your child instead. Fine to have someone else mowing your lawn or doing your plumbing but you don't want your nanny to have a right of substitution.

The employment status of your nanny (ie an employee) gives her a number of rights. These include the right to the national minimum wage, paid holiday, maternity leave etc and after qualifying periods: redundancy pay, SMP, protection from unfair dismissal etc

So yes, if she qualifies you would have to pay SMP (and sick pay!!) but you can claim it back from HMRC.

NannyTax or similar payroll companies cost about £300 ish per year.

If I remember rightly you now have to inform HMRC monthly what tax and NI your employee has paid.

Payefornannies.co.uk charges around £135 a year to process monthly payroll.

Yes you would pay SMP but you can reclaim it from HMRC. Your employee would get holiday whilst on maternity leave, that part is not reclaimable.
Don't worry about someone becoming pregnant until it actually happens as you can't refuse to employ someone due to a possibility they may become pregnant. Imagine if your boss did that to you - you would not be happy.

Remember to agree a Gross (that is Before tax/ni deductions) salary, then changes in employee tax code won't impact on your total cost too much.

Use www.mranchovy.com/calc/ to get a feel for what your costs will be. Gross salary+employers NI plus then other costs such as the payroll admin, outings/activities, mileage if nanny uses their own car.

Celine thank you, your points seem to make obvious sense! I suppose when you have never had to be involved in this before, it's hard to get your head round!

Thanks for some ideas of cost nannynick, that is helpful, and I will look into it further.
My nanny is also a relative, and is planning to ttc at some point, so she herself does not want to leave her employed job, to be my nanny, unless we are clear about how maternity leave and maternity pay works. If I had to pay her maternity pay out of my own pocket (whilst also paying for alternative childcare cover) it just wouldn't be feasible. So we just want to know what we are getting ourselves into before we take the plunge!

Thanks again for all the comments, they are very helpful.