'Mother's help' tax...

[freezingdrizzle]

I am a bit confused. I am looking for a new au pair (none sole charge, for some help with my 3 year old as I have a few health problems.) I have found a very experienced, lovely girl who is looking for a transitional job between being an au pair (she has done 3 au pair jobs already with young children) and becoming a nanny. She would like to be paid 200GBP per week plus full board. This seems fair to me. But does that mean she should be paying tax???
Any help appreciated. My frazzled pregnancy brain is not working this morning.

Use mr anchovy's tax calculator here

www.mranchovy.com/calc/paye201415

you can play around with the amounts you pay her and decide on a figure that works for you both. On £200 salary there is £20 or so of tax/ni (both employee and employer) to pay, but it's a lot lower on £190/week.

Its a bit of a pain having to register as an employer and you have send in monthly reports to HMRC (I use the payroll site).

Make sure that the figure you agree is gross (before tax) in case her tax code changes for any reason you don't want to end up paying loads more out.

Yes at that pay level there will be Tax Deductions.
It is your responsibility to make the duductions from gross pay, provide a payslip everytime your employee is paid, report amounts to HMRC and to pay HMRC on your employees behalf, plus pay Employers National Insurance.
The nanny payroll companis can help. They charge varying amounts 99-250 a year.

So at what point does au pair pocket money flip to being taxable?

When its below the threshold for registration purposes.

Currently approx. £192 per week for someone with no other employment income.
National insurance levels are different though and you will pay employers NI of 13.8% on all earnings over £153.01 per week.

Au pairs have special rules but I these rules apply only if certain criteria are met - and allowable earnings are likely to be a lot lower than £200 pw.

Threshold for NI is lower than tax , around £110 pw iirc and tax about £190 pw

Or when its over the threshold I should have said

thank you! glad some people are a bit more on it than i am :)

Do remember that at that pay rate it will certainly not count as pocket money and she won't be an au pair so all usual employment legislation will definitely apply (as the ECJ says it should to au pairs but the UK appears to be willfully ignoring this).

I suggest you pay her £7900 (£152 a week) and if necessary reduce her hours give this lower pay. That lower sum means no national insurance is due (nor tax) and so you could avoid having to pay employer NI etc. However you might want to take some advice on that as she is living in so that presumably is some kind of benefit in kind which might be taxable?

She could use the extra hours freed by your employing her for less to make up her income to £200 by babysitting for other families and on that additional income from her other job she would be responsible for paying tax on it.