Nanny net/gross pay nightmare - help me navigate this!

[MtnBikeChick]

I have just hired a fantastic nanny. This is my first nanny. she works 38 hours a week for me over 3 days. She works the remaining 28% of her time for another family. She has worked for them for a long time. Nanny wanted to be paid £10 net. I said that was fine but we would need gross pay rate in the contract, and from day 1 explained that the weekly gross amount was designed to result in her earning £10 net per hour based on current tax rates etc.

Other family have historically had a net pay contract and things were a bit notch potch - random payslips, no nanny pay company, etc etc.

The other family are now using a nanny pay company (same as us) but NO ONE seems to be able to figure out how to manage the pay so the nanny gets what she is expecting net. We have no benefit of her tax free allowance (yet). To complicate matters, she will be ending her contract with the current family in a couple of weeks and not starting the new one until the Autumn. We are the main employer as we employ her 72% of the time, but over the summer will be the sole employer.

Nanny is getting cross because she is expecting to receive £380 net a week but right now she is getting less from us because we are paying tax on everything we pay her.

I am losing sleep and I am desperately worried I will lose my nanny.

Should I just change to a net pay contract?

This may help explain things to the nanny
Tax year runs 6th April to 5th April, so earnings throughout the entire tax year are taken into account. Income tax is calculated on the total income during the tax year. So the personal allowance gets used up and the remaining amount is taxed, at 20% for up to £31,865, then it changes to 40% Tax Bands 2014/15

MtnBikeChick - I think your job would be paying her around £25,000 a year. So adding another job on could mean that total earnings in a year does go into the 40% tax bracket. It depends how much the salary in the other job is but there is less than £7000 before hitting the next tax bracket. Does the nanny realise that the more she earns, the more she will be taxed. Whilst the 40% tax only applies to the salary over £31,865 it may be a surprise to her that her income is that much and will be taxed more as a result.

You are quite right to agree a Gross salary. What figure to agree is tricky if the nanny wants a certain take home pay.

I actually rounded up and specified £13 gross. I used mr anchovy's calculator and put in no of hours, and a code of 700L as by this stage I knew she would work 28% of her time for the other family (roughly 30%). I realise this is crude but £13 ph gross is 10p more per hour than the amount the calculator gives so I rounded a little. The other family pay £10net and have net pay contract. I want her to split tax allowance either 100% to us or at least 70%. I don't think I am at fault - I have quoted gross pay since my first email offering her the position. I am a decent person, just want to do the right thing.

No you are not at fault. £13ph gross sounds like a lot to me and if it were the nannies only job, they would get more take home pay than they are wanting.

Don't think there is anything more you can do. You have decided upon the salary and offered the job based on that salary. Nanny needs to decide if they want to take the job, or not. You may lose the nanny and need to recruit someone else. However I hope they will see that your offer is good.

£13 gross sounds about right for £10nett if working a 5 day week

Are you happy to pay £13 gross

Where if just a 2 day nanny would be more like £12 gross /10 nett

Sorry wilding saw you had double posted - many of my nannies also discuss nett

I have read a lot of these threads over the years and it amazes me that some nannies seem to feel that they are the only group of working people that is immune to personal taxation...

As a nanny I can tell you it has little to do with feeling like we are immune to personal taxation. It's about finding employers who are willing to pay tax in part/at all. I have been asked in more job interviews than I care to remember if I was ok with employers only paying part/no tax on my wage. They ask the agencies the same questions too. It is not us that see the benefit from avoidance. Sadly it does make it harder for those who do pay.
It does always impress me how diligent nanny employers are on here, sadly not always the case.

Fair point, but even mentioning 'net pay' still sets in train the 'oh, if he/she just wants net pay then maybe I will pay her cash' train of thought....

It's the agencies and employers who advertise net wages. The balance of power is with the employer, not the employee. If a nanny has a net pay arrangement it is the fault of the employer, it's that simple.