How do I 'employ' a nanny? Finding the legal/tax side confusing!!

[emeraldgirl1]

Forgive me if I sound a bit dim, I'm insanely sleep deprived.

If I employ a nanny, what do I need to do with HMRC etc? I need to register as n employer, this much is clear. But then I'm lost. The nanny has another job so I know I need to do PAYE but I'm clueless as to how this works. If my nanny is going to take home £10 per hour what will I actually be paying per hour and how does that fit in with the PAYE thing?!

Is PAYE a lot of paperwork, shoud I/can I pay someone to sort it out? Payroll agency, book-keeper etc?

And is employers liability insurance easy to arrange?

I know these are all probably v stupid questions but I want to get this right!!

Use a payroll company and they'll sort all this for you. Nannytax or payefornannies are both reputable. It's about £100 a year, but money well spent.

DO NOT agree a net wage. What the nanny 'takes home' is not your problem. Agree a gross wage. On a normal tax code £10ph net is about £12ph gross. Use MrA's calculator to help you.

Don't agree a take home/net wage. Agree a gross one. You could end up paying way more than you want to.

There are plenty of specialist nanny payroll companies - have a google for 'nanny payroll' or start a thread asking for recommendations. Nannytax is long established, for example, but no idea if they're good or not.

Some offer extra advice, eg on contracts and insurance.

Thanks! V helpful esp re the net/gross issue

Get help from a nanny payroll company for at least the first year, so you can concentrate on other things. Then if you feel so inclined and understand how the payroll company has done things, you could try doing things yourself.
www.payefornannies.co.uk gets recommended quite a bit on here, there are of course other companies. Have a look around, see who will do what you want for a price you feel is reasonable. Payroll services can cost £100-£250 a year, so quite a range in the marketplace. All will do the basic function - producing payslips and telling you when to pay HMRC. It's the other extra things that make the companies different, the support they give you with small employment and tax issues.

Employers liability insurance may be part of your home contents insurance policy. Check policy wording. You can get it separate but it is quite costly, so see if you already have it first.

I feel it is best to have a contract drawn up before the nanny starts work. Legally you have to give them something in writing within the first 2 months of working. Having it much earlier helps everyone know what the job is, what the agreed terms are.

Have a probation period in the contract with a short notice period, so either of you can end the agreement at short notice if things are not working out. Once probation is over, then notice period can be a month or more.

If nanny insists on having a set amount after taxes, talk to a payroll company. There is no way you can do it yourself these days. It will be like writing a blank cheque, as you won't know how much it will cost you.

So as others have said, try to agree a gross salary. £12-£13 an hour may be needed to get close to the £10 take home, though it depends on taxation and that changes due to varying factors beyond your control.

I do payroll ;-)

You let the payroll provider know what the gross pay is for the week and they calculate the net pay and advise you of when the PAYE needs to be paid to HMRC.

You also need a contract stating usual hours of work, rates if pay, holiday, sickness etc and you can get a basic one online or through payroll software.

If you want any further advice feel free to PM me.

Do a bit of research on payroll companies and what they offer. You may feel that for the first year it is worth paying the extra. Nannytax are expensive but will provide support on a lot of the employment extras beyond payroll. They're also the 'go to' company for the industry in terms of consultations do they're way ahead on, for example, how pensions will affect nannies. Not to say that other providers aren't up to speed but sometimes the extra is worth the cost. And no I don't work for them