Nanny earning below the threshold for tax

[Siwmai]

Hi,

We are considering employing a part time nanny and she will work 17.5 hours one week and then 15 hours the second week.

We have agreed a rate of £6.50 per hour which would be £113.75 the first week and the second week £97.50. This would average £105 per week which is below the threshold for tax (she doesn't have any other jobs).

However in addition to term time working we would want her to have the children for approx 32 full days per year to cover school holidays at £52 per day.

This would create a yearly salary of £7156.50

This then makes an average of £137.62 per week which is below the £148 threshold. This would also allow the option of up to 6.5 hours overtime each week (if required).

'HMRC states:

If you pay your employee more than £148 a week you'll have to operate PAYE.

If you pay your employee between £109 and £148 a week inclusive and this is their only job and they don't get other taxable income, there are no tax or National Insurance contributions due, but you'll need to keep a record showing how much you pay them'.

Does this mean I have to provide a payslip? Or just record the hours myself? Is it ok to work the weekly pay out over a 12 month roster or does it have to be under £148 every week? Then do I pay her for the hours worked each month or a monthly salary of the £7156.50
divided by 12? Suppose that gets technical if she were only to work for us for 6 months (hopefully this is a long term arrangement).

Lastly how do I calculate her holidays? Would it be unreasonable to say that 3 weeks will be dictated by us when we have holiday includes Christmas) and she can take 1 week when it suits her (we have a lot of holidays 3 - 4 per year). Also she would get all bank holidays off.

Any advice gratefully received as this is all new to us and we're slightly scared about the whole thing.

Thanks

I thought you had to register as employee if you paid £109 or more in any week (or the monthly amount in any month).

Call a payroll company, get advice. If you get things wrong, HMRC can fine you. Payroll companies will give free advice and can produce payslips and complete electronic filing of documents to HMRC for annual charge of 100-250. They can also help with holiday calculation.

Holidays will need to be done as hourly calculation if the working hours differ I think. There is some way to do average over previous 12 weeks but not sure how that works. ACAS has info about holiday entitlement and the various ways it is calculated.

Call the HMRC employers helpline. They are very helpful on there.