Registering as an employer to employ nanny

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We're about to recruit a nanny for a 6 hour/week after school job. It's not going to be her only job, although it may be for a few weeks.

I've had a read of the HMRC website and think we need to do the following. Can someone confirm as I tend to glaze over on their web pages...

I need to register as an employer. I'm already registered for Self Assessment. Would it be advisable to change my registration to include being an employer, or keep them separate in case at some point in the future we aren't employers but I still need to do SA?

Is it a mandatory requirement to have Employers Liability insurance?

Is it mandatory for the nanny to have Employee's Liability insurance? Does she need any other insurances?

Thanks!

Yes, as they have other income you have to register as an employer and file returns each time you pay your nanny. You also need to provide payslips showing any deductions made from their pay for income tax and national insurance (though national insurance is unlikely as you will probably be paying below the amount at which that applies). NannyNick will probably come along at some point and will be able to tell you what the various taxes would be deducted, if you say how much you will be paying. Would also probably be no employers national insurance.

Do not agree a Net salary. When talking to your nanny always discuss salary as Gross, the amount before taxes are deducted.

There are various nanny payroll companies who can do all the HMRC reporting for you plus are there to help should your nanny take a sick day, go on maternity leave, some will even chat about general things to do with having someone working in your home.

Yes, you must have employers liability insurance. This is usually part of your home contents insurance, so check your policy or talk to your insurer to confirm you are covered for a domestic employee.

A nanny does not need to have insurance but many do these days as it protects them in the event of something going majorly wrong such as a serious injury to a child in their care at no fault of the nanny.

What country are you in? Will you be using any assistance with childcare costs, such as tax credits or childcare vouchers?

Other insurance that your nanny may need is suitable car insurance. If they use their car to collect your children from school, then they need to inform their motor insurance provider that they are working as a nanny (part time) and to have business use added. Some insurers will do that at no cost, others will charge a small fee and others will charge lots or even refuse. No idea why there is such a difference between motor insurers.

I would keep the employer registration separate from your self assessment, as your nanny is not a business expense.

Employers NI is not going to be a worry if they only work 6 hours a week for you. You would need to be paying them over £26 per hour to start getting Employers NI starting.

If they start your job before any other work, then their personal tax allowance would apply to the job and there would be no income tax to deduct. If they have other work and then start with you, then there other job may use some or all of their personal allowance, so income tax on their earnings with you may be deducted from their salary and paid to HMRC (by you, on behalf of your employee) thus it is important to agree a Gross salary.

You are being very good thinking about this. Some people might just pay cash, no questions asked. So nice to see someone who is aiming to do things properly even with it being such a small job.

Would they ever do more hours, especially in school holidays?

If she currently has no job, then as you would be paying under £112 per week, you would not need to register as an employer. You would be wise to keep accurate records of what you pay her... you could write payslips on a self-duplicating receipt book (available from a stationary shop).

Gov.uk: Employing People - Results of Quick Check

So if she starts your job first, she would then tell her second employer that she already had a job and then she would need to call HMRC and get her tax code amended to take account of her earnings with you.

Thanks all.
I believe she's currently doing temp work, so the main tax code is probably deployed elsewhere.
We've agreed a gross salary of £11/hour.
She's possibly going to do extra hours in the school hols. Can we just pay overtime for that?
It sounds like I need to register as an employer.
Luckily DH's payroll department have offered to do the payroll calcs for us. Sounds like I can type out payslips and retain a copy for ourselves?

You can agree to pay overtime or you could do a temporary change to contract. Either way it changes the amount of pay for those particular weeks, so it affects the employee income tax, employee NI and employers NI calculations.

Payslips have to contain certain information but can be produced as you like. I would imagine that DH's payroll department would use their software to produce them for you if they are doing the calculations (and presumably the reporting to HMRC), as it is simple enough to push the print button on the software.

Thanks. I'd assumed I'll need to do the HMRC submissions as it'll be tied in with paying whatever employee tax is due?

You need to establish what DH's payroll department will actually be doing.

For a small employer the payments to HMRC are due every 3 months - January, April, July, October. Page 5 of this Employer Bulletin explains more about Quarterly Payments.

That's really helpful, thanks

So DH's payroll department are just using their software to run the figures for me, and print a payslip.

I need to pay the nanny and provide a payslip, pay HMRC any deductions and file HMRC returns.

I'm confused about payment dates for returns to HMRC though - can anyone help?

When I spoke to HMRC on the phone, to set myself up as an employer, they said I would need to do returns on or before the monthly pay date.

DH's company think returns need to be done before the 22nd each month - that may be as they have over a certain number of employees though?

I've just read this and think my obligations are as follows:

End of month 1

• pay nanny + provide payslip
• calculate deductions and report to HMRC

By the 22nd of month 2

• pay HMRC any deductions from previous month

If someone could corroborate that would be great as these HMRC help pages really do make me go . Dreading having to do Self Assessment!

Thank you

The payroll software will do the monthly returns, assuming you pay monthly, or the weekly returns if paying weekly. The FPS (Full Payment Submission) needs to be sent on or before the employees payday.

No idea if it is different for very large companies.

Payslip I would aim to generate before the end of the month, such as by the middle of the month. You pay the nanny the Net Pay figure on the payslip. If any payment is being made using childcare vouchers, this comes off the Net pay figure. So if the Net pay was £1000 and the voucher value was £200, then you would pay the nanny £800 directly and the voucher provider would pay £200.

You should be able to pay HMRC quarterly, not monthly (so payments would be in January, April, July, October). This is due to your tax/nic/employer nics payments being less than £1500 per month. Some nannies can be paid a lot and thus the tax/nic/employer nics can total to more than £1500 so HMRC would then request that they are paid monthly but your nanny is working very few hours so there may be only a small amount to pay. Electronic payments would need to reach HMRC by 22nd of the month, so the next quarterly payment is due by 22nd July.

PAYE: payment frequencies and payment due dates

Q1 started 6 April. It ends 5 July. Electronic payment is due by 22 July.

So if employee is paid on the 28th of the month, the tax/NICs and Employers NICs would be totalled for 28th April, 28th May and 28th June.

You then pay to HMRC using the Accounts Office Reference, making sure you pay in the period 9th July-22nd July.
www.tax.service.gov.uk/pay-online/epaye

For anyone reading this who is thinking they really cannot be bothered with all this, there is good news. There are nanny payroll companies who will do the vast majority of this for you, leaving you with just having to pay the nanny and to pay HMRC when the payroll company tells you to. NannyPaye and NannyTax are the largest providers, there are other smaller companies. Admin costs vary, typically around £15 per month for monthly payroll, a bit more for weekly (as there is physically more work). Look out for the small print about charges for things, such as closing an account and employee leaving (P45).

Hi there, found this thread and am in a very similar situation, about to employ someone for 4h a week. She already works for 2 other families and I'm pretty sure they haven't registered as employers. They pay her by bank transfer not cash in hand - so there is an audit trail - but I think each of them individually are below thresholds so they don't pay tax/NI... but with my 4h added it may push her over threshold (not sure). Ideally I'd do things properly but any advice on how I do this if she or they don't want to?

Get them to complete a P46/new starter form. If they state clearly that your job is their ONLY employment then you can keep that evidence and present it if at anytime in the future HMRC question the situation.

Write a contract that states the salary is Gross. Then your liability is for what would have been due on that gross amount.

If you ever pay £112 or more in any week, register as an employer so you become their primary employer and get their full personal tax allowance.

New Starter form
https://www.gov.uk/government/uploads/system/uploads/attachmentdata/file/513621/Starterrchecklistv1.0.pdf

This is so helpful. Thanks.

If only I can find someone who will take the job i have for them!