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Childcare

Paying my new nanny!

12 replies

copey · 18/08/2006 22:36

Hello, I have just employed my new nanny and am extremely happy. However having agreed a gross wage, due to circumstances, she has started 2 weeks early and naturally wants paying at the end of the month (having onky worked 2 weeks & 4 days) I haven't yet registered with nannypaye/tax and am trying to work out how much to give her. Do I pay a daily rate? This seems like an awful lot when I compare it to her monthly salary? I assume I am being really thick! Any tips?

OP posts:
thewomanwhothoughtshewasahat · 18/08/2006 22:41

if you're thinking of using a pay role agency - and I would recommend you do - it saves a lot of hassle - just get on the phone to them asap. if your nanny needs paying before the agency can work out the tax and ni and what she should get for the first month, then why don't you just agree to pay her a rounded up figure and then adjust it when you get the proper figures. once you know how much her monthly or weekly wage will be you can set up a direct debit.

Ladymuck · 18/08/2006 22:52

On what basis have you agreed her gross wage (ie monthly, annual, hourly etc). You will need to work out the pro-rata salary quite carefully but it does depend on what her rate is agreed upon.

In terms of tax and NI, then I would phone the HMRC New Employers line - they will quite often work out the tax for you (and are cheaper than the payroll companies).

copey · 18/08/2006 23:20

Thanks girls, but what I really need help on is adjusting monthly salary into paying her for 2 weeks & 4 days. I think that she is assuming that her wage is being divided into 20 days (as in one month's work @ 5 days per week) and therefore she will be earning 14 days worth of salary. I have agreed to CIH until the start of the month. Am I getting stung?

OP posts:
thewomanwhothoughtshewasahat · 19/08/2006 09:49

if you have agreed a monthly salary then that isn't 20 days - a month is more than 4 weeks. to translate a monthly salary into a daily salary you need to do
monthly salary x 12 = annual salary
annual salary / 52 = weekly salary
weekly salary / 5 = daily salary

then in your case the first month would be daily salary x 14

then you need to work out the deductions - which is where the agency comes in

what's CIH?

Ladymuck · 19/08/2006 10:00

CIH=Cash in hand. If you're paying her monthly then I wouldn't bother with an agency - you can simply phone the employer's helpline each month and they will tell you the deductions. If you then file electronically you also get cash back this year.


When you say cash in hand does that mean that you're not deducting tax etc this month. If so then obv the amount will be higher than normal, but be aware that the nanny could later claim that she thought that tax had been deducted (so the taxman will be chasing you, not her. And if she does declare it(!), then it is still going to look odd on her return (ie why is she getting paid both via payroll and in cash for the same job).

bluebear · 19/08/2006 10:13

If you intend on using nannypaye/nannytax (just haven't registered yet) just give them a ring and give them the salary details and that you need to know the net amount for 2 weeks and 4days, and they will tell you over the phone, and sort out the payslip etc when you register.
I did the same thing - I use nannypaye, and rang them up in a panic having employed my nanny with 7 days of the month to go, they told me how much to pay her and sent me the forms to register with them, then the payslip came through just in time.

(Hadn't heard of the HMRC helpline though)

nannynick · 19/08/2006 12:27

Agree with Ladymuck that if you are paying a fixed monthly fee, there is little point in using a payroll company, as HMRC provide Employer Helpline, plus a CD-ROM you use on your computer to work out tax/ni deductions.


----------
This Is An Example Only
Even if your figures are exactly the same, do NOT use my example... work it out yourself using the Employers CD-ROM and/or printed material from HMRC.
----------



P49 - Paying someone for the first time - this can be useful to read.

Has your employee (nanny) given you a P45?
If not, a P46 must be completed.
See P49 for details of how to get the starting tax code, from information provided on P46.
Box B I suspect is the most typical, which means you use 503L week1 or month1 (2006/2007 tax year only! See P49)

You need form P11 This is a big form, so hard to print out. As with all forms mentioned here, best to get them via the New Employer Helpline.
Also need to read the P11 Handbook (E11)

The Employers CD-ROM has a P11 Calculator on it, this makes the job much easier.

By Paying Monthly, you only need to do this 12 times a year, so while it may seem like hard work at first, it gets easier.

The starting point for the P11 is the Month which INCLUDES the first payday.

Your nanny wants paying at the end of the month.
To make things a little easier, lets set a specific date... lets say 25th of the Month. That would then leave a few days for a cheque to clear/bacs to transfer etc.

25 August 2006 falls in Month 5. So you start the P11 on line 18.

I will use a Gross Pay figure of £1690 per month (which is £78 per day based on a 5 day week). Obviously you will need to use the correct figure you have for Gross Monthly Pay.

As we are calculating based on days from start to month end (14 days), we need to work out some figures.
Annual Gross = £1690 x 12 = £20280
Weekly Gross = £20280 / 52 = £390
Daily Gross = £390 / 5 = £78

For Month 1, you are paying 14 days, rather than a full month.
Daily Gross x 14 = £78 x 14 = £1090

Look at Monthly Table A
CA38 - NICs

Assumption: Employee is Female, aged 16-59, Single, No pension, not a widdow, No other job
If your employee DOES NOT match that, then you may need to use a different NICs table - consult New Employers Helpline.

The NEXT SMALLEST figure to 1090, is 1088.
Using Table A:
Employees (nanny) NICs Contributions: £73.70
Employers (parent) NICs Contributions: £85.76

Now to work out the tax. Will assume tax code 503L (which can be used for Emergency Tax)

Again it is far easier to use the Employers CD-ROM to do this... it will come with the New Employers pack which you get when you register as an Employer with HMRC.

Pay Adjustment Calculator
Use the calculator to find out the tax free pay.

  • P11 data -
    Col2 = 1090 (pay for payday)
    Col4a = 419.92 (figure Pay Ajustment Calculator)
    Col5 = 670.08 (col2 - col41 = Taxable Pay)

    HMRC have a PAYE Tax calculator on their website. Alas at present (Sat 19 Aug) it is being updated. Back online Monday 21 Aug.
    So we will have to use the Tables: Calculator Method

    Taxcode: 503L
    P11 Col5 = 670.08
    Month =5

    Col5 is LESS than amount shown in Table SR (896.00), so

    Col5 Rounded Down = 670
    Multiply by 0.10 = 67

    P11 Col7 = £67

    Now to work out the Payslip
    ---------
    1090.00 Gross Pay
    73.70 minus Nat.Ins Contributions
    67.00 minus Tax Deducted
    =======
    949.30 Net Pay
    ---------

    So the nanny is paid £949.30
    Keep aside £73.70 + £67.00 + £85.76 (Employers NI)
    Total: £226.46 for paying to HMRC later.

    Employers NI figure came from CA38 (see NICs section above)


    There you go... wasn't that hard... was it!

    Disclaimer: I am not an accountant, I was just following the rules available at HMRC.gov.uk
    It is best to do all this AFTER you have got your New Employers pack. So call them RIGHT NOW - 0845 60 70 143 (open 8am to 5pm Sat and Sun)
    See New Employers - First Steps for details of information you need to give the New Employers Helpline.

    ----------
    This Is An Example Only
    Even if your figures are exactly the same, do NOT use my example... work it out yourself using the Employers CD-ROM and/or printed material from HMRC.
    ----------
SecurMummy · 19/08/2006 12:55

If you call the tax people they can send you out a cd rom and a chart, you pug in her tax code and gross wage and then it willwork out the deductions etc, you write it on the form and on a wage slip pay over the money and pay the tax/NI then forget it until next month. At the end of the year, as has been said you can file your return online and get paid for it! We got £250 back this year - with just one employee like you have!

IMO it is really simple and saves a fortune!

As to what to pay her this time, I agree with hat woman's calculation, work it out that way and call the tax people, they will tell you the deductions etc.

copey · 19/08/2006 13:54

Thank you so much everyone - you have all been brill!
Can I just ask .. should I not be paying her a set monthly fee?

OP posts:
NAB3 · 19/08/2006 14:23

I always got paid a set monthly fee when I was a nanny.

Ladymuck · 19/08/2006 16:12

Well I pay my nanny weekly rather than monthly. Nothing wrong with a monthly wage at all (that's how many people are paid). But my nanny's salary is an agreed hourly rate and her hours does tend to vary each week as I may ask her to do some overtime. I think that the point is that if you pay monthly then there are only 12 payslips per year, so I'm not sure that a payroll company is value for money.

By the way HMRC is the new name of the Inland Revenue, so the HMRC helpline is just the Tax office.

copey · 19/08/2006 18:19

Thanks Ladymuck

OP posts:
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