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

That is what I clarified in the next post - the current employer would be daft to increase her hours at a salary that is based on her take home pay - unless they know that the amount they pay gross now is below the market rate and they are effectively using her personal allowance to subsidise their childcare.

Well, it depends.

The nanny I referred to earlier had been working 4 days a week, at £10 per hour net for her other employer. When she went down to 2 days a week, they cut the gross pay to keep it at £10 per hour net - they also cut it when the tax free allowance went up, so they didn't really have an option but to increase it when she got another job.

It will depend on how much the other employer wants to keep her vs costs of recruiting etc and whether the salary is generous or stingy

Merry I don't think anyone has mentioned the current employers increasing her hours?!

That definitely wasn't what I was talking about. Apologies for the confusion. I was talking about the nanny leaving the OP and finding a second net pay job.

Outraged
Understanding Gross /Neg agreements - that will be Gross = pay before tax and NI taken off and Net = pay after tax and NI taken off.
Wow that's complicated :)
Understanding splitting the tax code. Well she might find she doesn't have a choice with this. But again is that really complicated?
My main bug is that OP is posting on here about someone else tax problem. Treating the nanny like a child not a professional person. I find it depressing. The government have tried to enhance the intellect of childcarers by encouraging level 5 qualifications in nurseries etc. encouraging childminders and nannies to be qualified. But at the end of the day children are still be cared for in the large part by low educated people. Iv clearly hit a nerve with many posters.

outraged, I think she would have difficulty finding anybody apart from the other family to pay her on a net pay basis given that she has used up her pa and most salaries are agreed gross.

'But again is that really complicated?'

Have you read the thread? Because a lot of people here are confused. Including you. You've come to the conclusion that the nanny doesn't want to pay tax....when there has been absolutely no evidence of that. You've clearly misunderstood somewhere. So yes, it is pretty complicated.

Merry the majority of nanny jobs are still advertised and agreed net (unfortunately), so I don't think she'd have any trouble finding another family foolish enough to offer a net salary actually. I'm not saying she should do this btw, I'm just explaining why the OP may be concerned that she'll leave.

Wow that's complicated

The irony is that you clearly do not realise that the rest of us are talking about a net pay arrangement, also known as net to gross pay.

Not usual or particularly easy to understand from what I gather on this thread.

You, for instance, don't get it

Yes I get you are talking about net pay arrangements. I think that is obvious; the OPs nanny has this agreement with her first family.

But Net agreements should not be made, an employer will never know what tax obligations an employee may have. They might have students loans, tax debts from previous years, pensions, jobs they don't declare to them.
I do get it thank you and I think you are other posters are making it far more complicated than it is.

I repeat you have a tax allowance :
Once you have earned that amount you pay tax at 20 p in the pound.
It doesn't matter if you have a net or gross pay agreement you will still be liable to pay that amount of tax.

The OP stated that the nanny was surprised when she found she was only taking home £8 and not £10 she clearly didn't understand that having used her allowance (in job 1) she was now liable to pay 20p girls every pound.
If she had understood the basis principle above she wouldn't have been surprised.

I don't think she'd have any trouble finding another family foolish enough to offer a net salary actually.

I see - if that is the case the OP might have a problem. That might also explain the nanny's surprise.

I find tax easy.

I find looking after children who aren't mine five days a week hard.

Horses for courses...

'That might also explain the nanny's surprise.'

Exactly. It's very possible that she has never had a gross pay agreement before. I know nannies in their 50's, who have been working for 30+ years and have never had a gross pay agreement. It's unfortunate, but it's the reality.

This is the first job she's been paid gross and she's been working as a nanny for 15+ years. So yes, it does explain her confusion.

Florence I'm not treating her as a child. I'm trying to help her understand something that she has told me she isn't clear on. Woe betide me for trying to help someone!

Your help on this thread, on the other hand, has been invaluable.

I think we just have to accept that Florence and her 5 year old are significantly cleverer than the rest of us dimwits who find the whole thing a bit confusing from time to time.

I think you are being very generous to Flo there Outraged.

I think she googled net pay arrangements just before her last post

I've always wondered who exactly benefits from the whole way that the nanny industry operates it's Paye schemes. It's such a strange anomaly and as someone said earlier it dates back to almost pre-historic pay arrangements for domestic staff. Other industries have managed to change the way things work as the rules change. Think IR35 & CIS are the most obvious, so I do wonder why not nannys iyswim.