Going in to a nanny share - few questions?

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I have an opportunity to be part of a nanny share. A friend of mine has employed a nanny on a full time basis and we got talking the other week about the nanny having my DD once or twice a week too.

I've been reading some threads on nanny sharing so I'm considering some of the practicalities and they've pointed me in the right direction, but can I bounce these of you all too?

My DD would be looked after at my friends house. Now I'm willing to offer my house for alternative weeks as this seems to be what people do from other posts I've read. However, my friend has 3 DC (6, 2 & 7 months) so I don't think this is practical at all given she looks after them full time and does the school run with the eldest. Do I need to factor in additional payments here for food, lighting etc given that my DD will be at her house?

Payment: I will only be using the nanny for around 10 hours a week. I could pay her for those hours directly (would I then have to pay her NI?) or I could pay my friend and she sort payment out with the nanny? What would I be expected to pay given that she already pays her a full time wage (I've not found out how much she pays her yet...) but I'm assuming she's paying her around £8 ph. I wouldn't be expected to pay £8ph would I?

Do we need to draw up some sort of contract or rules with each other, ie what happens with holidays, if nanny has sickness, or if it's not working out. I'm worried about several things: 1) that I don't know this friend very well (although from what I know of her she is lovely, balancing work and running her own business, very much parents like me, has 3 lovely children and has similar values and interests to me) and 2) I'm leaving my DD with someone I don't know. It is my better 'ideal' than putting her in a nursery but I wondered what would happen if I decide it isn't working a few months down the line- is it easier enough to exit?

Has anyone got any experience of going in on a nanny share like this (already employed and joining part time)? Did it work or was it a failure?

Has the nanny been asked if she would like to be a nanny for two families yet?

Yes and she is fine with this.

A few answers...

Do I need to factor in additional payments here for food, lighting etc given that my DD will be at her house?

Possibly, although this could be done through the share of the nanny's pay (see below).

Payment: I will only be using the nanny for around 10 hours a week. I could pay her for those hours directly (would I then have to pay her NI?)

You don't start paying NI unil £144 a week so probably not. However as this is the nanny's second job you will have to operate PAYE and (unless you arrange a tax code split which I would definitely not recommend in this situation) deduct 20% from what you pay her. If the current employer uses a payroll agency it would be by far the easiest thing to do do to use the same one.

or I could pay my friend and she sort payment out with the nanny?

There are a number of potential complications with this, as well as up to £37pw being lost to the tax man: I wouldn't recommend it.

What would I be expected to pay given that she already pays her a full time wage (I've not found out how much she pays her yet...) but I'm assuming she's paying her around £8 ph. I wouldn't be expected to pay £8ph would I?

No. The nanny will probably expect to earn more for this period, perhaps £10ph, which would be shared between you in some way. There are two factors here: there are 3 children in the other 'half' of the share and you have only one, but the share is happening in the other house. First the three of you need to agree on how much the nanny should get in total, then you and the other parent agree on the share.

Do we need to draw up some sort of contract or rules with each other, ie what happens with holidays, if nanny has sickness, or if it's not working out.

Yes. The payroll agency should have something you can use.

is it easier enough to exit?

Depends on the agreement, but it is probably easier for you than it is for the other family who would be left with a nanny they depend on who is used to being paid more than she was before.

MrAnchovy thank you so much for taking the time to reply and provide answers.

When you say there are many complications with paying my friend and her paying the nanny, could you expand? I genuinely thought this was the simplest solution so I'm a bit confused now!

It's more complicated from a tax POV, and because one family becomes 'the employer' and takes all the associated liability.

It used to be common for one family to just pay the other but although it's still possible it seems experience has shown its better for you to also employ the nanny for the hours she is working for you. While that creates a few administrative headaches at the start it prevent more problems than it causes.

"When you say there are many complications with paying my friend and her paying the nanny, could you expand? I genuinely thought this was the simplest solution so I'm a bit confused now!"

OK, if you do this there are only two possible ways the law can interpret it:

1. Your friend is providing you with a childcare service. Whilst she probably wouldn't have to register with Ofsted there are implications for her if anything were to go wrong, in particular if the unthinkable were to happen and your child suffered an injury which the nanny or your friend could possibly have prevented.

1. You and your friend are jointly employing the nanny. This would be OK (although less tax efficient) if you set it up properly with a contract between you and your friend as to how you were going to deal with everything, but by doing this you and your friend may become jointly liable to the nanny for everything - so if your friend does not operate PAYE properly, the tax man can chase you for all the tax. If the nanny qualifies for maternity leave and your friend decides she doesn't want her back after the leave, it becomes your problem to sort it out.

So that solution only appears simple because it doesn't deal with any of the complications up front.

Frak and MrAnchovy - thank you. Lots to think about now.