Short-term nanny - tax etc??

[Bearwantsmore]

We're hoping to employ a nanny for 20 hrs per week just for 5-6 months and I'm not sure whether there is any way I could avoid tax and NI?? I'm willing to pay it but a friend suggested that as it was a short-term role it may be acceptable (??) to just pay the nanny directly...
Any thoughts?

There is no way round paying er's, and then deducting tax and ni from someone in your employ.

Its not worth the risk of being a tax cheat to save a few quid.

Acceptable to you maybe but not the nanny.

Paying NI (or the appropriate low earnings exemption certificate) ensures they are entitled to receive maternity, sick, unemployment etc benefits.

As well as the legal duty to pay income tax...

Thanks. Actually we were planning to pay the tax and it was the nanny who suggested we didn't - I suppose because it would mean she'd receive more money. And a friend seemed to think it was often done... I agree with your points though, and we would really prefer to be completely above board. I just wondered if there was any sort of loophole as it was a temporary role. Oh well!

You are the employer. Agree a Gross salary, that way you DEDUCT income tax and Employee NI from the nannies salary. You then pay Employers NI on top of the Gross salary.

Do not do what your friend suggested. HMRC are wise to it and are introducing real time reporting which will start to catch people who are not doing as they should, as it will come to light quicker - like when your nanny takes another job, questions could be asked about what they did for income for the past 6 months.

If the job starts after 1st April 2013 and if you paid £10 gross an hour, the employers NI is £7 per week. MrAnchovy's PAYE calculator 2013/14 tax year. You could do payroll yourself or pay a nanny payroll company to do it for you (cost around £130 a year).

What may have been suggested was that the nanny took the job in a self-employed basis which is possible for temp nannies. That doesn't mean they aren't paying tax/NÍ but that they're deducting it themselves.

In your case, however, it's a relatively long temp job and the other employment litmus tests would indicate employment rather than self-employment.

We have a temp nanny (only for a month or so) who is doing it on a self-employed basis. We assumed this was ok because she is not only working for us but also for a few other people from time to time, she only works when she is available, not fixed hours and she already pays voluntary NI contributions as a self-employed person.

We have a temp nanny (only for a month or so)

this helps point towards self employment

We assumed this was ok because she is not only working for us but also for a few other people from time to time,

so does this

she only works when she is available, not fixed hours

and this

and she already pays voluntary NI contributions as a self-employed person

the contributions are not voluntary, but payment of the (mandatory) self employed Class 2 contributions also helps.

Nothing is decisive on its own, if you are in any doubt you can get a decisive ruling from HMRC's specialist Status Customer Service Team.