PAYE etc for 10 hours p/w?

[Chloris33]

I'm probably about to employ a nanny to look after my son 10 hours a week. She said she charges £12 an hour, which I'm presuming is gross. I'm going to have to check with her, but it sounds likely that her earnings with us will not exceed her personal tax allowance. .I guess I still need to register with HMRC and go through PAYE. What is the extra expense involved likely to be (on top of the gross rate p/h)? I'm new to all this.

Do not assume it is gross. As the employer you decide the salary so you could make the offer gross and see what the nanny says.

You will need to declare to HMRC as over the Lower Earnings Threshold for National Insurance. You will need to deduct Income Tax if this is not their only employment. Employers National Insurance will depend on the gross salary so you need to confirm that the pay amount being agreed is gross.

If you agree £12 gross per hour, or even £12 net per hour, the Employers NI is zero if they work 10 hours per week. What will change is the Income Tax.

Some costs to think about.

Using a nanny payroll company to calculate the payslips and remind you of when to pay HMRC, plus provide you with any help you need regarding employing a nanny... £180-£276. You won't need to provide a pension scheme at this time as you are a new employer, you will need a scheme in place for 2018. www.nannypaye.co.uk www.nannytax.co.uk and others provide nanny payroll services.

Contract of employment... either use a template document such as from www.nannyjob.co.uk but do make sure you know how to write contracts as template documents do tend to need some adaption, or the nanny payroll provider will be able to provider a bespoke contract (cost varies).

Your nanny will be entitled to a minimum of 5.6 weeks paid holiday. So 5.6 x 10 hours = 56 hours of paid holiday per year. You can dictate when all that occurs but it isn't very nice to do that, so what often happens is that you decide some and nanny decides some. Consider if they will ever be needing to work on a Bank Holiday, if not and if that occurs on their normal working day then they take it off as part of their annual leave. Is the 10 hours all one day, or is it spread over several days?

Employers liability insurance - you should already have this as part of your home contents policy, check the wording. If not, then it is available as a separate product for around £100 a year though do check with your home contents provider first as they may be able to add it to your existing policy for less.

Consider any non-taxable payments such as nanny using their car to transport your son. Mileage rate up to 45p per mile is non-taxable. Mileage rate is only payable on work travel, not the commute to/from place of work.

Also look at activity costs - toddler groups, swimming, museums & castles, whatever nanny will be doing with your son.

That's really helpful, thanks so much x

Hi, sorry to jump in on an old thread but hopefully similarly related question - If I'm planning to employ a nanny for 10 hours a week (1day) for couple of months and if we are happy with each other, consider extending to 30hours over 3 days - She says she charges 8/hr, would be below the lower earning limit but she does have other jobs, so does that mean I would still need to go through the PAYE etc during these two months? I see PAYEfornannies do a reduced rate for temporary contracts but not sure how much. Just worried it won't work out and we won't be able to find someone..

Have you found someone who would do 1 day initially and then be able to do 3 days?

£8 gross per hour sounds rather low. What salary you offer a nanny will vary depending on location, the nannies experience and training, and how much you can afford. I would look at job listings (such as on www.nannyjob.co.uk) to try to get a feel for what other jobs are offering.

If it is someones second job, I would work out your budget based on the worst case scenario, which is that you get none of their personal tax allowance. A payroll company can assist you with the calculation if needed.

Yes, you would need to do PAYE if the nanny has other employment (which they indicate by selecting option C on a P46/New Starter Checklist).

When looking at payroll providers, ask them about all the costs involved. Ask what happens when you change the payroll such as changing from 1 day to 3 days, such as changing the pay rate. Some companies will dock you a months subscription for every change you make, others will not. There are some providers who will do very short term subscriptions, as short as one month. Others will do annual subscription but have a six month minimum, after which they will refund any unused months.

Thanks for the advice - very helpful, especially with regards to the payroll companies.. I need to ask them more specifics.

Yes, we have verbally found someone to do this, (actually, the extension in 3 months, but I am thinking of doing it in two). I found her via childcare.co.uk website and seems like most people were quoting 8pounds/hr for my area. Ofcourse, drive 40mins away, it changes..We are quite rural.

Actually, she says she is self-employed and has an accountant to do all her taxes, but I think I will ask if she is willing to be employed rather than this, cos I'm not sure if it will really fit, the job we're hoping she will do.

You are offering a permanent job, not ad hoc work, so you want to be the employer and be able to tell them what to do. So I quite agree that you employ them. It does mean you have costs like employers NI and pension contribution but you know you are doing things right and they get the security of having a notice period, paid holiday.

Yeah, I agree, we feel more comfortable if we are employing her, hence the questions about payroll companies etc. I'm trying to recall when employers need to start doing pensions contributions - was it by 2018? or 2017?
Mat pay is refundable but SSP isn't, is this correct?