Employed or self employed

[nihatsgirl]

Good morning ladies, just seeking opinions. I work as a contractor myself and need a nanny for 20 hours per week when I return to work after baby. I have a live in au pair for my older kids. I would like to offer the role as a self employed one. Please could you advise why this may be a good or bad idea? I see a lot of objection from the board for self employed nannies

You would have to convince HMRC that the job (nanny) would not be employment. Not simple.

Hopefully Nick and a few others will pop in to advise you further.

If she's required to work the hours you tell her to an she is required to work 20hrs per week at a set rate, and yYou are required to give her 20hrs work each week then she is employed. You cannot just pick which one you want, it is a matter of fact not choice.

Look at the table in the link below, i think to get the arrangement and reliability you require you will need an employee. A nanny is very rarely truly self employed.

www.rossmartin.co.uk/employers/essential-know-how/171-employment-status

Thanks for the link I will have a look. I work in a similar capacity and I am self employed, so I don't see how HMRC should object. It's not a full time post and although hours are fixed, days worked is variable. She may be then seek other work elsewhere if preferred.

If you work as a contractor but have fixed hours/days, you should be a limited company rather than self-employed otherwise your employer could be in breach of inland revenue regulations. And the same would apply to you with your nanny

Thanks for that Odd. Interesting, I have worked as a contractor in this capacity for more than one company for longer than 5 years. I will call my accountant to clarify about possible breach.

IR35 is complex and confusing to me. Not sure if this helps www.contractoruk.com/ir35/top_ten_ir35_myths_debunked.html

Nanny being able to work elsewhere makes no difference to employment status to my knowledge. Status is on a per job basis, someone can be employed in one role and self employed in others. The overall picture may be taken into account but hard to know how HMRC make decisions on that.

What financial risk is there to the nanny? They are not running a business providing a service, where they invoice their client and could spend months chasing payment and may not get any payment. They are not providing any tools to do the job.

They don't control when or where they work. Some of the work can't be done at their home for example, where as you may be able to take work home with you. There is no fixed timescale for completion of the project, no penalty clause for not completing on time. The control in having a nanny is firmly in the parents court, or would you be happy for your nanny not to come in to work and say not to worry can do a different day instead?

Nannies are rarely self employed, it's not like an evening babysitter. So I would not go down that route. Do a 20 hour a week contract, factor in costs for employers NI and payroll admin.
Have a quite short notice period if you like, could be a week in year 1.

Ah, Cindy that clarifies, the objection is about employment protection and job security. Whereas I was trying to avoid another cumbersome taxation process that I barely understand.

I will see about having this done as part of my usual tax process with accountant. I will offer an employment contract. As a contractor personally, I would rather remain so, than become an employee again.i understand better why employee status is preferable in this regard.

Hi, the nanny will definitely be an employee. Unless she is a maternity nurse, a temp nanny or if she can choose when she comes, it's always the case.

the risk that you take is that if someone finds out, or if it turns badly with your nanny and she complains, you will have to pay all the taxes and paid holidays since the beginning and. More

Not difficult to employ a nanny. Simply register as an employer.
Agree a GROSS amount - do not agree net as nanny may have other income.
Check home insurance policy for employee in home.
Factor in 5.6 weeks annual leave, possible maternity pay and pension in 2016.
You can also use child are vouchers , where as if she is self employed you can't.
Think it is actually illegal for a permanent nanny to be self employed and you risk a big fine etc.

Yes it is about employment rights. Most nannies would want to have paid holiday, notice period, agreed working hours, maternity/paternity leave and redundancy protection.

If they were self employed they would not get paid holiday and they may not increase their pay rate to compensate for that.

I feel it is to protect the majority. Whilst not ideal for all situations, employed status is generally better for the worker.

Thanks everyone for your responses. I was prepared to pay an enhanced rate for this. I have however agreed for my accountants to do payroll for thus. It's only 20 hours a week and hardly any tax or NI liability which is why I thought this may be better.

Yes, with a gross salary the NI liability will be quite low as NI is calculated on a per job basis.

Pension kicks in 2017 (I think), so not a cost to factor in yet and even then it's starting at 1% (I think) so won't be huge cost.

(On mobile so can't check things easily)