Is Mr Anchovy about? Or any other nanny tax knowledgable people? Splitting tax code advice needed!

[PassTheCremeEggs]

I have a nanny for three days a week. She works for another family for the other two.

I agreed a gross salary with her of £12ph. First payslip in - whole thing taxed at basic rate because other employer is using the whole of her personal allowance.

Other family pay her net () £11ph. Because they are using her allowance, she only gets take home from me about £8.50 an hour when we estimated it would be just under £10ph based on a £1000L tax code.

Payroll company says she can split her code between us. If she decides to do this, her other employer is going to be paying a lot more tax to pay her the same net wage and I'm concerned this is going to cause problems for her with them. But if she doesn't, she's going to lose out in her take home pay from us.

What should I do?? Any advice gratefully received! Also I need an easy way to explain all of this to her because she doesn't really understand and I'm terrified we're going to lose her over it because she's not getting enough take home

Florence, I too think you are being pretty horrid.

OP, I think it was maybe a mistake to tell her that she would get a lot more take home pay if you got half or even the whole allowance as ultimately that's out of your hands - it's up to her to go and have that discussion though. Do you know the other family at all?

Sorry, I mean the reaction of the other family is out of your hands!

And you think someone dealing with tax for the first time and trying to understand it would automatically be bad in an emergency?

Flo is on a wind up now I suspect.

OP, like I said earlier - just sit back and wait. Once you've done the first or second pay run Hmrc will be all over it like a rash.

Yonic no I don't know them - I've spoken to them to get a reference before we employed our nanny but that's the only time I've had any contact with them.

I think probably best just to explain the basics of how it works and leave her to decide what she wants to do.

I love the worry about her coping with an emergency situation... What, like a life threatening maths problem? I know plenty of people who are seriously intelligent but wouldn't know what to do in an emergency with children, and vice versa. Ability to understand tax doesn't equal good nanny for a 2.5 and 1 year old...just as being a tax advisor doesn't make you a good nanny. Hilarious.

You are making it far too complicated. You agree Gross and deduct the tax as advised.
The nanny deals with the HMRC re her tax code she is an adult not your child.
I don't understand why you posted in the first place.
An adult should be capable of understanding PAYE tax it is very very simple.

"What, like a life threatening maths problem?"

Snort!

Like there being nuts in the Pi?

Flo, I don't understand why YOU posted in the first place, so that balances out nicely, right?

I know loads of intelligent adults who don't understand PAYE.

OP, you are lovely trying to help your nanny out.

Florence, in April 2014 my nanny had to ask HMRC to split her tax code, they didn't do it automatically and they weren't very keen. They may have changed since then, but it's very recent.

Scrabble they split mine in July 2014 , I never asked them. But different tax offices may be different. If the nanny asks they can't say no. But in this case if the nanny is using all her tax allowance in one job she will pay the same over the year in tax.
OP I posted because I found your post patronising to the nanny. You say you have explained x times yet still she doesn't understand? I expect she does and was hoping to void tax.

How. How, how, how could she hope to avoid tax in this situation.

And yet again - her other employer is paying her NET. So if we transfer the personal allowance to us, she still gets the SAME salary from her other employer while getting more take home from us. So yes she'll pay the same overall tax but she will actually get more money take home per month. This is because her other employer unwisely agreed a net wage with her.

Perhaps it's you that doesn't understand the system!

Florence I suspect that's it - different tax offices taking a different view. It seems too unlikely that HMRC as a whole has changed policy within a single tax year.

But they have scrabble. Not just policy but the entire way the system works.

Yes, I agree that April 2014 was a very different time for Paye.

No such thing as tax offices anymore, not really. Everthing is automated and central. Been like that years tbh.

Immediate code splitting is a recent thing. Until RTI Hmrc simply didn't have the information until after year end unless a P45 was put in.

Not sure why Flo and co are so quick to disagree

I'm laughing at Florence anyone who thinks a person who can't understand the simplicity that is the Uk tax system is a bit dim.

OP, it sounds like when you offered gross pay, you sat down and worked out with her approx what that would be net, but you made a (reasonable) assumption when you did - so the nanny, who until now has only thought in "net", as many un-MN nannies seem to did think she knew what she was getting.

Florence are you feeling ok? You're normally a 'normal' poster, but you are sooooo far off base here, you're making yourself look like a nut.

To the posters wondering why nannies talk in net it's because until very, very recently ALL nanny jobs were advertised net. Jobs from agencies, jobs in the post office window, jobs in nanny magazines, jobs online, jobs through word of mouth. ALL jobs. It's hardly surprising, or difficult to understand, that people working in a market where ALL jobs are advertised net will discuss net wages. Most people taking their first nanny job are young and won't have had much prior work experience. They enter a workplace where everything is net, they talk net. No-one is born with an in built knowledge of the tax system and it isn't taught at school so if you work in an industry where net is standard that's what you go with.

The reason nanny jobs are advertised as net, harps back to some ancient tax rules regarding domestic staff.

Things are changing, but it will be slow as these things always are.

Sorry still disagree because it is not about understanding complex tax only one simple principle :
You have a tax allowance, @10 K last year once you have earned that you pay 20p tax for every pound you earn.
If the nanny understood that she wouldn't have wondered why her pay was lower in job two.
I repeat it is simple.
And yes OP I get that if she transferred some of her allowance to you she would earn more because family A have a net agreement.
But how long would that last?
Surely they would just say they are changing to Gross and issue new contract . Unless they feel nanny is due a pay rise.
I find it disappointing to be honest that so many nannies and emoyed still talk re Net Pay it doesn't happen in any other job.
I'm also very aware that a lot of employers pay cash in hand and thus some nannies are not used to paying tax.
If you don't think that's true just go on the nanny Facebook page.
HMRC are aware and will prosecute

I can't see the other family agreeing to stick with the net pay agreement if her tax code is split - wouldn't that increase their costs by about £5k?

Merry it would increase their costs by the tax on £5k if our nanny split the allowance equally. So about 1k. But yes, I agree family would probably be unlikely to stick to the net agreement in those circumstances.

duh! yes, of course you are right. Never post before coffee!

In the end I think it comes down to whether the nanny is charging the market rate for her services, or she is so good that she can ask for a pay rise from her other employer and they will bear the cost. In the circumstances I think it would be very cheeky to ask for them to pay her salary net when she is getting more money from you, but maybe she is that good.

At the previous agreed net rate I mean.

Also, why would you lose her? - she will encounter the same problem in any second job (unless they pay her cash in hand). She would also encounter the same problem if she worked more hours for her other employer (although the effect might not be so obvious)

(I suppose she wouldn't encounter the same problem if her other employer stuck to their net pay agreement, but they would be a bit daft to increase her hours on that basis).

Florence this isn't about understanding the basics of the tax system. It's about understanding net/gross agreements, splitting tax codes, what that means for all involved etc. If you read this thread you can see the confusion that it's causing. You're obviously entitled to believe whatever you like, but when that belief is clearly wrong, it does make you seem a bit nutty.....

merry she wouldn't encounter the same problem if a second family also had a net agreement, but they would then end up with a big tax bill.

I think the nanny needs to work out her overall (from both jobs) wage and see if that's right. If it is, then there is no need to worry at the moment. If HMRC split the code automatically then she'll have to deal with that with her other employers.