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This can't be right? Need to earn £45k to cover cost of FT nanny?

99 replies

BrummieOnTheRun · 22/01/2007 18:56

Someone please tell me I've cocked up my calculations because I'm desperate to go back to work!!
I've tried 2 online 'nanny tax' calculators which tell me I need to add about 49% to the nanny's ?8/hr to cover the nanny's tax, nanny's NICS and employer's NICs.
And I've assumed about 33% of my income will go on tax and NICs.
Nurseries aren't working out any cheaper as it's for 2 children under 2 and they have added hassle-factor.
Am I massively miscalculating? I bloody hope so!

OP posts:

sinclair · 22/01/2007 20:23

Can you work fewer days? If you are in a well paid job (over 37k i think) you will be paying 40% on anything over that threshold - reducing the net out of which you pay your nanny - but nanny costs the same and in fact her tax goes up too as an average the more days she works. I did 3 days a week in your situation and paid over roughly half my net to nanny and her tax/NIC.

there are some tax experts on here so hopefully someone may be able to enlighten you.

Another option of course is to 'declare' 3 or 4 days and pay cash in hand for the 4th/5th day. Illegal but lots of people couldn't manage if they didn't do it.

It is grim but you're right in thinking it is the most flexible solution - it's just that that flex and control comes at a price.


Ladymuck · 22/01/2007 20:29

£8 net per hour seems a bit steep but I guess it depends on where you live! I'm paying £8 gross in Outer London.

Do you have the option of using childcare vouchers? Nannies can use these if they have approved status.


martini · 22/01/2007 20:39

Unfortunately your calculations are right.

How about a full or partial nanny share? Or nanny with own child.

Please don't go down the route of not paying the tax - its illegal and not fair on the nanny. How would you like it if your employer told you he couldn't afford to pay your National Insurance because it was too expensive?


Bluebear · 22/01/2007 20:52

If you're looking at paying the 400net agency quoted salary then yes your calculations are right...however, neither my nanny or any of her nanny friends earn anywhere near the 400net mark (London) is worth advertising yourself (try or and see if you have any applicants who would expect to earn less (eg. someone who has been working in a nursery and so is qualified and experienced but has no 'nannying' experience).
I share my nanny and that cuts the cost a great deal, you could look for someone with school age child(ren) who might like to share.
Other than that, have you a spare room, live-in nannies have lower salaries than live out.


nannynick · 22/01/2007 21:13

Back in August I did a worked example for calculating a nannies first pay packet - see here - since the revamp of Mumsnet, the formatting has been lost, but it may help to show expected tax, NICS and Employers NICS.

Very quickly and not very accurately, I'll see if I can work out a rough amount you need to earn, to pay a full time nanny.

Nanny works 5 days per week.
Nanny works 10 hours per day.
Nanny earns £10 per hour gross.
Nanny weekly earning £500
Nanny yearly gross pay £26000
Nannies typical net wage £19340.54
( with thanks to ListenToTaxman for PAYE calculation )
Employers NICs, £51.65 per week.
( using Table A of NICS table )
Therefore Yearly Employers NICs £2685.80

So you need to take home £26000 plus Employers NICS £2685.80 at a minimum.

For simplicity sakes, lets add on a bit so we cover any small unexpected costs, so we will call it £29000.

For a £29000 take home figure, you need to have a gross annual salary of £40000
( with thanks again to ListenToTaxman )

So yes, it is quite possible that for a full time nanny you need a salary of £45k - though it will depend on exactly how many hours you need childcare, and how much you pay the nanny! My example above shows that £40k is needed for a nanny on £26000 gross (nanny on around £7.40 net per hour, 10 hour days, 5 days per week.)


wickedwaterwitchhaspmt · 22/01/2007 21:16

No, sadly, I don't think you are miscalculating. A nursery will be cheaper, a childminder even cheaper.


BrummieOnTheRun · 22/01/2007 21:29

Oh dear. Had hoped my Excel spreadsheet skills had deserted me, but it appears not. Thanks for all your responses.

So that means for the 20k nanny salary, I need to earn an extra 25k just to cover all the govt taxes. Fantastic. I wonder how many women they are losing from the job market because of this (and getting no tax contribution at all).

I'd be willing to do a nanny share, but I'll have a newborn + an 18mo + a 3yo (after school), so I think I'm near to exceeding the quota, and do want to work pretty much full-time. (Hard to find decent part-time employers, isn't it). Unfortunately cannot offer live-in, but will look into approval scheme, ladymuck. And also whether hiring direct via gumtree et al reduces hourly cost vs agency-found people (good suggestion bluebear).

Tks again.

OP posts:

nannynick · 22/01/2007 21:45

What hours/days do you need childcare for?
What after-school hours do you need?
What happens during school holidays, training days, child sickness?
What is your location (town name/village name is helpful, but if not want to give that use nearest major place)
When do you need childcare to start?

With more details of your precise requirements, you never know but the Mumsnet community may know of someone (like a childminder or nanny) who could help you, and thus give a much better indication of cost.

With 3 under 5's I suspect a nanny would be your best option, though you may find a childminder in your area with sufficient space (but most childminders are limited to 3 under fives, thus must only have over fives at present).

In my area (Surrey/Berkshire border), a nursery would cost around £445 per week, for your two youngest children.
A childminder would cost £8 to £10 per hour, for the two youngest children.
This excludes any care for your eldest child, but should give you some indication of costs of alternative providers.

Certainly the lower an hourly rate you can get a nanny the better, but with the ages of children you have, I do not feel that you will want to skimp on things like the carers experience and possibly qualifications. Avoiding agency fees is certainly possible and worth trying at least initially.


Bluebear · 22/01/2007 21:57

I have to admit, with 3 children, I would bite the bullet and pay for an experienced nanny rather than a first-jobber, or take a career break (horrors). I had 17 months when I had 2 children in nursery and paid out more in childcare than I earnt - but I could see the light at the end of the tunneland knew that I would never cut it as a 24/7 SAHM.
We also use childcare vouchers to pay our nanny which saves us a fair amount per year (forgotten how much).
In this area, if you could find a childminder, they would be about £100 per day for a school day (ie. 4 hours for school child, £40 per day for littlies) but more in hols.
Wishing you lots of luck in finding a solution!


Skribble · 22/01/2007 22:08

£26000 a year for a nanny FFS, my Dh is a manager and earns less. Sorry but I don't see how people have ended up paying so much for nannies. Don't get me wrong I am a qualified childcarer and worked as a live in nanny for a while.

Spectacular really. perhaps I should try and find a nanny job again.


foxinsocks · 22/01/2007 22:14

where are you in outer london ladymuck?

£8 net is quite common round these parts (outer sw london)


hatwoman · 22/01/2007 22:14

I think you might have done a miscalculation. our 3 day a week nanny (£7.50 per hour net, 32 hours per week) costs roughly £16,000 pa. You need to be earning in the region of £21k- £22k to cover that. the very rough f-t equivalent would be a cost of the nanny being £26-27k, which would require you to earn about £36.

The 49 per cent addition to the net pay is over the odds imo.


Bluebear · 22/01/2007 22:19

The tax/NI does not increase in direct proportion to the net pay Hatwoman. So you can't scale up 3 days to 5 days and get the right figure. We started out with a 4 day a week nanny and then went to 5 and the increase in tax/NI was massive.


nannynick · 22/01/2007 22:26

Agree with Bluebear... alas there is no easy way to calculate the employers NICS, you have to refer to the NICs tables and to do that, you need to know the weekly gross pay. Unless of course, anyone knows of a better way.

Depending on exact requirement though, you can get nannies for less money than £10 per hour gross. I agreed an annual salary with my employer, which is far below £26k, but then again I do only work term-time (36 weeks +4 weeks paid holiday), not 52 weeks per year.


Skribble · 22/01/2007 22:35

Sorry I am still sitting here with mouth wide open in shock at those wages, what is the point in working to hand it all over to a nanny?


hatwoman · 22/01/2007 22:43

I know - I did realise that it was very rough (or rather flawed) because of that. but I do remember that when I first did my calculations I worked out that if I was f-t I would need to be on about £35k. out of interest when you went from 4 days to 5 did you take the full impact of that yourselves - and still carry on paying the nanny the same net rate? it's such a daft/frustrating way of working out nanny pay isn;t it? who else gets told their salary net?


jura · 22/01/2007 22:45

This reply has been deleted

Message withdrawn at poster's request.

jura · 22/01/2007 22:45

This reply has been deleted

Message withdrawn at poster's request.

nannynick · 22/01/2007 22:52

Nannies are just like any other employee... they are paid GROSS. Please please please stop dealing with nannies in terms of net wage, it's such a pain for YOU as the employer.

If parents and nanny agencies (some do already) only discuss wages in GROSS salary terms, then eventually nannies will forget about Net wages - at least, I can but hope!


foxinsocks · 22/01/2007 22:55

I worked out (in the last couple of months) that I would need to earn £42k to cover the cost of a full time nanny here (so £45k doesn't sound that far off).

I think one of the reasons net is discussed is because there are still so many 'nannies' paid illegally (i.e. cash in hand, no tax) that to compare wages with the legally employed nannies, it only made sense to compare the cash-in-hand wage.


Kelly1978 · 22/01/2007 22:56

god this is despairing. I am doing a law degree in the hope of returning to work eventually, but £45k??? I have 4 kids, I will never be able to afford to work!


BrummieOnTheRun · 22/01/2007 23:14

Nannynick - I'm in brighton/hove and want to return to work asap after #3 is born in March. Wld like PT (either x/days/week or short days), but difficult to find so likely to have to do full-time 5/days/week to start.

But now I feel completely trapped because:

  • asking for PT hours from a new employer is extremely difficult;
  • most of my jobs (marketing) are in London and therefore involve long days (commuting); and
  • local salaries (the ideal alternative) are about 15k/yr lower than what I was on and don't cover the cost of childcare if the 40-45k calculation is correct.

I haven't even thought about holidays/sick days, etc. I understand you should pay nannies sick leave, holiday pay and maternity pay. All reasonable requests for a normal employer, but if I end up contracting (work, not labour!) that gets very difficult.

OP posts:

Bluebear · 22/01/2007 23:26

Brummie - It is pretty standard that nannys only get Statuatory sick pay (which is payable after 3 days sickness - often nanny contracts say no pay for 1st 3 days then SSP applies) - Maternity pay can be reclaimed from the government (who pay slightly more than the actual pay to cover your admin costs) - Holiday cover can be covered by your own holiday cover (at a minimum you need to give 20 days for a 5 day a week position but this can include bank holidays).

Are Brighton nannies really earning the same as outer London?

Hatwoman - we only had to cover a couple of months with a 5 day a week nanny (which was painful enough) then we started a new nanny share - I only have 1 pre-school child and she is in nursery in the mornings so a share makes sense for us and for nanny. I did all the salary calculations though so knew how much the increase was and it was so awful to see how her gross salary could rise so much and there was so little rise in her take home pay.

And I agree with nannynick (as usual), the more we stop quoting hourly net pay and start using gross salary figures the better. (Having just searched nannyjob for some advice on something and seen a thread where a nanny is saying 'surely £200 a month more is nothing to someone in a big house' and realising that the nanny has no idea exactly how much more than £200 that increase in net pay would cost the employer (or that big houses come with big mortgages, often calculated before children come along))


hunkermunker · 22/01/2007 23:35

Do people work full time and hand over everything they earned to their nanny?




Soapbox · 22/01/2007 23:37

Some do Hunker - but most people just go through this process to work out how many days of the week they are working to pay the nanny and how many days they are working for their own money

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