Paying family member for childminding. What are the rules?

[Novia]

Apologies if this has been asked before, but I'm just looking for some advice on the rules relating to paying a family member to childmind.

It's a way off yet, but when I return to work we would like to pay my sister to look after our baby as she is a SAHM who lives locally. We were thinking around £600pm.

Do we need to arrange any sort of official arrangement to take any tax implications into consideration? Is there any sort of pay threshold we should avoid?

Ideally we would like to just do it informally and not have to do a load of paperwork, but not sure how realistic that is?

Any advice would be much appreciated. Thanks.

Just thinking about stuff I've seen on here before, aren't you only allowed to pay a registered Childminder? I could be completely wrong and I'm sure someone will come and tell me I am!

£600pcm would keep her below the income tax threshold so I imagine, as long as she doesn't have any other income, you'll be fine. If she does, however, possibly a tax return is needed?

I think you are only allowed to care for a child for under 2 hours a day with a reward - unless she is caring for the child at your house. This is regardless of her being family and a reward doesn't have to be money.

Having said that, I also think that technically as a nanny at your house you'd have to either employ her with all the paperwork and NI payments or she could be self employed?

I'm waffling a bit in the hope that people can correct me.

I read last night that you dont have to be registered as a childminder to look after children who are closely related to you.
So niece/nephew would be ok.
Look at www.scswis.com/index.php?option=com_docman&task=doc_download&gid=171&Itemid=378
That's in Scotland tho. I don't know how to do a link...sorry!

An aunt, uncle or grandparent (classed as close family members) can look after your child for money legally as long as you pay them direct and don't claim tax credit or vouchers. They would however be self employed I would think so need to do self assessment for tax? You are not employing them so no need for anything on your side.

Sorry x posts with purple honesty

Thanks everyone - much appreciated!

So there would be no problem with me just setting up a DD and paying her monthly - but she would be responsible for declaring any income, etc?