Nanny tax/NI paying under taxable allowance?

[OrchidFlakes]

We will be looking for a nanny 2 days per week paying £8 per hour for 2x 8 hr days.

The total paid will be under the £8000 personal allowance so will we need to pay tax and NI for her?

Also if she has a second job elsewhere then what happens?

We are complete novices at this!

The threshold at which you must report for National Insurance purposes is much lower - £107pw - so you need to register for PAYE.

If she has another job already you ALWAYS have to register for PAYE: you will need to make deductions using the BR tax code, which basically means 20% of everything you pay her (but there are some complicated rounding rules which means you can't get it right by just multiplying by 20%).

You can either use an agency to take care of this: they will charge upwards of £115 a year but given the enormous cock up that HMRC are about to make changes to PAYE that come in from April that is probably money well spent.

£8 x 8 = £64 (daily rate)
So 2 days is £128 (weekly rate)
Which is above £107 per week - Lower Earning Limit for National Insurance Contributions

So you need to register as an employer with HMRC.

What will the person do on the other days of the week - you probably don't know and I'm not sure you have the right to ask. You can get them to either give your a P45, or complete a P46 (on which they state if it is their ONLY job or not).

At £8 per hour gross, there is no Employee Income Tax, no Employee NI, no Employers NI.

AGREE A GROSS SALARY - then your nanny having a second job does not make a difference to your cost (Gross salary + employers NI).

You need to register as an employer and report earnings as then your nanny gets National Insurance credits. See this message thread where MrAnchovy says about National Insurance.

Ah MrAnchovy is on-line - follow his advice

Great! Thank you both so much! Just got to find a fab nanny now for our little guy

I absolutely agree with nannynick about agreeing a gross salary - it could save you a lot of money and trouble! You can read more about why here: www.letstalkgross.co.uk/for-parents.php

Best of luck with your Nanny search! :o)