Tax/NI, contract - self employed babysitter?

[drspouse]

We have just arranged for our usual babysitter, that our DS loves, to pick him up once a week from school, bring him home, give him tea etc when he starts in September.

We only employ her irregularly at the moment and she has other jobs - she has another school run job (mornings) and some cleaning jobs as well. I doubt her hours add up to full time in any week, given she doesn't work many hours on the other school run job, and she doesn't do cleaning all day every day. As it's irregular we currently pay her cash but I think we will ask about monthly cheque/bank transfer for the school run job.

Do we need to do anything about her tax and NI, given that she has other job(s)? Or is that all up to her?

I've looked up the criteria for self-employment and she meets some of them (she has various clients, she could in an emergency get someone else to pick him up - though if she let us know she had to do that we'd probably just do it ourselves; but she can't decide to pick him up at a different time. If she decided to take him for a walk/to the park instead of straight home that would be fine and we wouldn't ask her to notify us in advance, her decision, but she has to start/finish her work at school/our house).

And if you have this kind of arrangement, do you have a contract?

Oh and in general she can decide which jobs to take (i.e. she could decide to switch to all cleaning, or all babysitting, or not to work for one family any more, or that a job was too far to travel after she'd started it).

But we pay her by the hour and if we were late we'd have to pay her extra, though if we said "can you bring him home, give him tea, and hear his reading" but they went to the park and were late back just because that's what she decided to do, I suspect I'd be asking her to finish giving him his tea even if we were already home.

And we'll provide his tea/any equipment but I'd expect her to pay for her bus fare if she decides to get the bus instead of walking.

(referring to the "can she decide which jobs to take" and "does she have to do fixed hours or a fixed job" criteria).

Anybody?

I would consider this employment as you dictate her hours and she can only substitute in an emergency.

So we need to do the Nanny Tax thing? If we do, we're happy to do so. The requirements say you have to meet MOST not all of the criteria though, to be self-employed - we meet more than half of them.

So we'd definitely be paying her less than £160 meaning it should be a simpler admin arrangement according to this

www.telegraph.co.uk/finance/personalfinance/tax/9166942/Paying-tax-for-your-nanny-QandA.html

I would say she fulfils most of the criteria for self employment. Most of her work sounds ad hoc, she is free to dictate terms etc yes they are regular hours but it's just once a week.

However if hmrc do deem it to be employment as long as she has no other employed (rather than self employed) jobs, then unless you are paying her a fortune she will be earning under the Lower Earnings Level.

Get her to fill in a New Starter Checklist ftom the gov.uk website & tick box A then just keep it on file. As you only employ one person under the LEL you won't have to register for PAYE.

She will need to register for self assessment for her other stuff

I would have thought this was gone on a self employed basis. In effect, she invoices you and you are paying her.
The best round be to check with her tbh.

I suspect that paperwork may not be Lovely Babysitter's strong point but we will ask her what she does for her other school run job (I think the other stuff she does is different each week).

I have been wondering about other jobs such as music/swimming teacher. Parents would be pretty annoyed if their booked lesson was at a random time or location each week so the teacher is not free to change the time or location, at least not too much, and while I'd be happy with a substitute swimming teacher I might ask just to miss the week's piano lesson given that another teacher wouldn't necessarily know where I or my DC was up to.

I'm guessing those are self-employed teachers too.

Yes, dh is a self employed music teacher alongside being an employed teacher in a school. He provides a service at an agreed rate at an agreed time/place for a number of students. He has insurance & it's definitely self employed.

As you are wanting them on a regular basis I would make them an employee. You don't really want them to call you half an hour before pickup time to say they are doing cleaning elsewhere and won't make it... you want certainty, well as much as is possible.

If you get in as their first employer, all their personal tax allowance is likely to be allocated to your job.

Employment comes first, before self employment in terms of taxes, so when she completes a tax return she fills in the employment page for what you pay her and then she pays tax based on what personal tax allowance remains.

As you would be paying quite low, chances are it will be below the NI threshold (112 per week) so the reporting would be quite easy. You could try doing it yourself, or pay a payroll company to do it for you (they can also assist with producing a contract and payslips).

As they are your employee, you would need to give paid holiday (5.6 weeks is statutory minimum) but you would base it on total working hours per year in a situation of them doing more/less hours in school holidays.

Agree a gross salary, then if she were to get any other employment it would not make a difference to your cost.

Sick pay me be the main issue, but that only starts on 4th day of illness. You may want to look up how much that might cost you in the worse case situation of them being off for several weeks.

The majority of those responsibilities (except holiday pay which would be minimal) don't apply if earning under the lower earnings limitbwhich is £112 per week

Good point, sick point may not apply due to the salary level.

Music/swimming teachers do set their own hours, they maybe regular, but the set the times in the first place.
I am self-employed and do the same job as my employees, however, I decide my business hours, my employees work the hours I ask them to.

The fact she is doing an activity at the same at the same place has nothing to do with being self employed.
I am self employed, work always from the same place (which isn't what your Babysitter is doing) and have set hours. Some clients will come at the same time, some will decide to change but really I could just say 'You will have the slot from 3.00pm till 5.00pm every mionday' it wouldn't;t change a thing.
What changes is that you have a business if you are self employed. That means you can change your hours as you suit but logic says you will change them to also work for your client. You can say that you will stop tomorrow (unless contract says No) whereas you would have to give some advance notice to an employers. You do as you choose whereas an employee will do as her boos says.

There are some advantages and disadvantages to employ her in this situation but I'm not sure I would be keen on doing all the paperwork when I can leave all the admin stuff to her.

Just call HMRC - I don;t think they would have a problem with your babysitter being self employed in these circumstances. They are pretty helpful usually, just call them up and ask.

You then just need to take a copy of her self-employment certificate.

I don't have a self-employment certificate - what is one of those? I have a UTR and a Class2 Exemption certificate but nothing which states I am self employed when doing particular work.

I would use the Employment Status Indicator to see what that says as that will give a reference number and printout which you can keep on file.

If they are self employed do get them to give an invoice and terms of business. Do let them decide how much they charge.

I too have neve heard of a self employment certificate nanny & both i & dh were s/e for over 10 years. Maybe it's the letter/email you get when you first register as self employed & get given a UTR?

Nope I do t have any certificate st all either.
What I would ask fur is some sort of either invoice and/or receipt. Then you are covered in the sense that you have laid fur a service therefore she has to be self employed.
Whether she us registered or not, is declaring all of her income isn't your responsibility.

What I would ask fur is some sort of either invoice and/or receipt.

That's a good idea, DH (who doesn't work in this area but works with people who do) asked at work and the point made there by those that know was, even if we don't have a written contract with her as a business and us as clients, make sure we are clear between us that we aren't employing her.

So an invoice (maybe monthly in advance as I'm pretty sure she'd prefer to be paid more at one time, rather than after every pick up, and we'd prefer that too) billing us for the time each month, or a receipt showing we've paid her ditto monthly, will demonstrate a) that we aren't her employer and b) that she's operating as a self-employed person.

I don't think in advance is a good idea as that shows she's expecting to work a set number of hours? Most self employed bill afterwards for hours worked.

Our childminder is self-employed (they all are) and we pay in advance. Similarly with music teachers etc, you'd pay termly or monthly in advance.

Here is the HMRC guidance as to whether someone is self employed or not.
For me you are paying an hourly rate not a fixed price, she can not regularly substitute someone else to do the job and you are providing the environment ( your house) so she is employed.

Lonecat that's what I already referred to up thread. It says you are s-e if
most of the following are true

So they don't all have to be true.

Anyway now that DH has asked the professionally qualified people at his work I feel more confident that she is s-e so I'm happy to proceed as if she is, it's just a case of making the paper trail show she is.

Well I have a letter to show that I'm registered as self employed. (Maybe I should have said a letter rather than a certificate).

OP I would still call HMRC yourself to confirm.

A child minder is different as they charge per hour per child and are running a self employed business.

A person who is doing several jobs, one of which is looking after a child, is not running a childminding business. Childminders are paid for your child's holidays and sickness whereas a self employed babysitter wouldn't be.