Best friend wants to be DD's nanny

[NannyBestFriend]

NC as identifying.

DD (17mo) has been going to nursery since she was 5mo, for 16 hours per week. Not very happy with it for various reasons and thinking of moving her.

My best friend, DD's godmother, works there, though in a different room. She's just finished her qualifications, and has 6 years experience in a nursery setting. She's been looking for a part time nannying job.

She asked me a few days ago whether I would consider giving her a job as DDs nanny. I said she would have to get OFSTED registered, as my childcare is part funded from uni. She said she would, but obviously needs to look into what this would entail.

I'd want her to have her whilst I was at uni, and I have also started a new job where I'll be working 1 or 2 night shifts a week (depending on uni schedule - v flexible) so she could come and grab DD before DP goes to work and I can sleep whilst she cares for her. But overall it would be between 15-20 hours per week.

I'm also thinking of getting a dog. She's recently got one, so I thought she could possibly take both dogs with DD for a nice walk in the morning, drop them back to their respective homes or leave them at hers while she plays with DD or takes her to toddler groups, soft play, the beach etc. I think she would be really happy with this as she would be walking her own dog too, and DD would love chasing around after the dogs.

Sounds like a brilliant idea to me. My DD worships her, and were like sisters - never argued in 12 years of friendship, and I know we share very similar views in how children should be raised: I would feel comfortable in raising an issue I wasn't happy with or whatever.

But I feel like this might be more complicated than it seems. If she is my nanny, does that mean I am her employer, and have to pay NI contributions etc.? Does anyone have any experience or advice on the situation?

Cindy, your calculations look good.

If starting to employ someone between now and end of September 2016, pension contributions would start from 1st November 2017.
Employer contribution starts at 1% and changes to 2% from 06/04/18.
However the would not be automatically enrolled as they would be earning less than £833 per month. They would have a right to opt in, so a pension scheme would need to exist so there would be some admin involved. If they did want a pension, then you could do it as a percentage of earnings above the qualifying earnings level, so in this situation would be on around £200 of the monthly salary... so 1% being £2. From 06/04/19, contribution increases to 3%, so if still on same salary, around £6 pension contribution per month.

3 years ago DIL had exactly the same scenario as you have. Even down to getting a dog! All ended up a nasty mess, the lines were blurred between friendship and business.
If you really want this person to look after your DC then get her to register as a childminder and she looks after DC at hers. And forget the whole dog idea: you haven't really thought this through have you?

I guess you have to set out beforehand your parenting rules, what would annoy you, if you wanted to give her notice, the notice period. I think itd probably change the dynamics of your friendship. I personally wouldnt fo it. Re cash in hand. Yeah its unlikely youd be caught. But say you did, is it worth having a criminal record over?

You also have to think about any other work she is doing. If she stays part time in the nursery, they will take up her tax free allowance so if you paid her £9 net for 16 hours you would be paying £189 per week/£822 per month as you'd be paying tax NI and employers NI on all of her wage.

If you do try to pay her cash in hand and pay her tax and insurance and you get caught, you will be liable to pay all back taxes, plus a huge fine of up to £10,000, possibly a prison sentence and you will get a criminal record, you would lose your job at the psychiatric hospital. Nannies talk! I know at least three nannies whose employers do not declare the entire wage they pay and I know at least 10 nannies who know about it, any one of us could call HMRC with the details.

I have to admit that when I was a much younger nanny (been doing it 30 years now!) I took part payment in cash until I bought my first house and my (parents) accountant told me how it's no benefit to me and more of a hinderance, if I only declared I was earning £xxx per month, I would only get a mortgage based on that. My insurance would only cover my declared earnings if I was unwell and couldn't work for some time. Etc. Now there is a bug crack down on nannies by HMRC. It's really not worth the risk.

and NOT pay her tax and insurance