Please, some employment advice for a newbie.

[Lukethe3]

Hello. We are just about to hire our first nanny. She will be very part time, just 10 hours a week but this may go up to 15 tops. What is the best way to employ her? Paye or ask her to be self employed?
And I have no idea of the going rate down here in Dorset- how can I find this information out?

Avoid getting confused between Employment Law and Tax Rules.

Your relationship with your nanny will be that of an Employer:Employee, you will be wanting to dictate when they do the work, where they do the work and how they do the work. You probably don't want a situation where you need childcare at say 8am but they say they can't come in until 10am.

So they are your employee, they are not self employed - for the purposes of Employment Law.

PAYE has to be operated if you pay £107 or more a week, OR if they have another job.

So, find out if they have another job. P46 is the HMRC Form that is used for confirming if the employee has another job or not. This PDF is now a digital document, so you need the latest version of Adobe Reader to view this form.
If they just tell you that they don't have another job... then at some point get them to complete a P46 anyway, so you have on file that they told you that you were their only employer.

Agree a GROSS salary, regardless of the tax situation. The situation over them having another job could change at a future time, or they may have deductions from income, or something like that which is done via taxcode, so protect yourself from such costs by agreeing a Gross salary (the salary from which deductions are made) rather than Net (the salary after deductions have been made).

Salary to offer is hard to know. Decide what you feel the job is worth to you, then offer the salary and see if it's worth it to them to do the job for that amount. You need to offer at least National Minimum Wage (which varies depending on their age). Maybe compare it to other jobs in the area... I've just seen a part-time admin assistant job in Wareham advertised at 7.56 and hour. Would nannying compare to that, hard to say, but it may help you to decide that £8 an hour is a suitable rate, rather than say £10 an hour.

If the hours will be nearer 15 rather than 10, then you will I suspect be paying at or over the £107 per week. So you will have to register for PAYE.

So factor into your costs the cost of running payroll - £130ish a year for a nanny payroll company.

Thanks nanny nick. Now I'm confused. She will have less than£107/ week so do I not need to pay NI for her. I've looked at the hmrc website but cannot work out what I have to do.

from hmrc
If you pay them less than £107

If you pay your employee less than £107 a week and they don't have another job elsewhere - or other taxable income such as a pension - you don't have to do anything.

If you pay your employee less than £107 a week and they don't have another job elsewhere - or other taxable income such as a pension - you don't have to do anything

Unsure of what you need to do if she has another job - hopefully someone on here can advise on that.

NI is based on salary so if you need to pay that or not depends on the wage.

The question here is probably more about if you have to operate PAYE or not.

Does the person have another job or income?

Once you know the answer to that, then you can look at what paperwork and deductions from salary you need to make.

Would they always earn less than £107 a week? What about if they did 15 hours one week - still under £107?

If they have another job or other taxable income

If your employee has another job - or other taxable income, such as a pension - you'll need to operate PAYE no matter what they earn. This is because their tax-free allowances will normally be set against the pay from their main job or pension, which means tax may be due on their earnings from you.

as someone said you can get a payroll service to sort it you for you

Thanks all. She doesn't have another job. So do I just hand over the money without doing anything official?

You'll obviously need a contract and you may want to ask her to fill in the P45 from her last job and give you parts 2 and 3. If she doesn't have a P45 she'll need a P46.