Paying tax

[allaroundmyhat]

How easy is it to pay a nanny's tax and NI? Where do i start???

We use a payroll company to do it for us. There are a few to choose from, most popular is nannytax.co.uk I think, but we use nannypaye.co.uk (which is smaller and cheaper).
If you employ a company, for a fixed fee, they will send you weekly/monthly pay slips for the nanny..you pay the nanny the net amount on the payslip and then every 3 months the payroll people send you a tax bill. You send the cheque for the inland revenue to the payroll company and they pay your tax on your behalf.
Since the payroll cos file the tax information electronically the IR give them a large rebate which they return to you and covers most of the cost of employing them in the first place!

If you are brave there are computer packages which will do the tax calculation and print pay slips for you..then you can file your information yourself and gain the rebate all for yourself.

And, if it's not too late, remember to agree a Gross rather than Net salary with the nanny so if there is any unusual tax situation for them or if tax rises you will still pay out the same total amount.

I'd say it is quite easy IF you use the CD-ROM and Internet site which HMRC provide to employers. The Employers CD-ROM has improved a great deal over the past year and you should find answers to most queries you have on their website, or you can call the New Employers helpline who will assist you.

Starting point if you have never been an employer before, is to get the New Employers pack from HMRC.
First Steps to becoming an Employer
Probably best for you to call 0845 60 70 143 and register via phone - though you can do it on-line, but if you phone they will talk you through anything you are not sure about.

For the first pay run, I've written out an example. For the example I used the manual method, but you will find that using the Employers CD-ROM makes it a lot easier. Paying Nanny For First Time Example

Details regarding when you actually pay the nannies tax/ni on your nannies behalf, and your Employers ni, will be sent to you by HMRC when you register.

Agree with Bluebear about agreeing a Gross salary, will make your life a bit easier. Also try to do pay on a monthly basis, as then you only do the payroll run 12 times a year, not 52.

My suggestion would be to start doing it yourself, and if you really get very stuck, then contact a payroll agency to do it for you.