Cost of daily nanny, and childcare allowance

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Hi, I'm thinking of hiring a nanny to look after my two very young children for about 6 hours a day during the week. I live in the North, and am looking for a live out nanny. Does anyone currently employ a nanny and how much does this cost you? Also, our household income is less than 35k, are we able to claim any of this back from the government or in tax relief? Any help would be much appreciated, I've only just started looking at this as an option and it's really confusing. ...

Hi there I employ a live out nanny also in the north and pay £11.50 gross/hour, which I think is about average for an experienced or well qualified nanny. The actual costs are quite a lot more than that when you add in employers tax and NI so I strongly recommend you speak to a nanny tax company to give you an estimate of total employment costs. Acas online also has some good guidance. On top of that we have a kitty for outings and groups, and pay 45p/mile petrol, it all really adds up. So it's not a cheap option but it's absolutely brilliant in so many ways when you find the right nanny. I haven't ever heard of claiming anything back from the Govt except nanny maternity pay which I have had to do a couple of times over the years! Good luck!

Costs will vary, location can be a big factor in that, though somewhere between £8-13 gross per hour may be a guide. Talk to a local nanny agency if there is one, have a look at other job adverts in the area and on sites like www.nannyjob.co.uk and www.childcare.co.uk. The shorter the hours the higher the hourly rate is likely to be.

Do the hours you need fit with nursery provision in your area? A nursery may be cheaper but isn't as long term - consider what happens when eldest goes to school.

No, you don't currently get tax relief for all your childcare cost. Currently some employers provide Employer Supported Childcare which is a salary sacrifice scheme, commonly it is Childcare Vouchers. So you get a deduction from your salary and save a bit on your Income Tax and National Insurance. It's not a lot, max of £933 a year. See www.kiddivouchers.com/calculator.php

In 2017 a new scheme is starting called Tax Free Childcare. That is worth up to £2000 per child. Mumsnet: Tax Free Childcare

Useful factsheet for parents thinking of employing a nanny - New Employer 2016/17 Factsheet from NannyPaye (pdf)
That factsheet tells you about what a nanny payroll company helps you with plus has a tax table on it. Around 50% of nannies will talk in terms of Net salary (what they earn after tax deductions) where as what you need to know is your total cost as the employer. 6 hours per day is part-time in terms of nannies (a full-time nanny can be doing 50-60 hours per week), so don't assume it is their only job. It may be their main job though if you are offering 30 hours per week, so you may well be using all their personal tax allowance... just don't assume that to be the case - they could have another job already which uses all or some of their personal tax allowance. So try to avoid Net wages and agree a Gross salary.
Use the tax table as a guide... if you were to pay £300 net per week to the nanny and if it was their only job (tax code 1100L) and had no student load, then it would cost you £378.32 per week, plus cost of activities and mileage. As a new employer you would not be providing a pension scheme but you would do that from late 2017/early 2018, so another cost to keep in mind (1% employer contribution initially, then 2% from April 2018, and 3% from April 2019).

That tax fact sheet is really useful thank you nannynick

That is helpful thankyou, there's so much more to hiring someone than first appears!