Paying a nanny 8-10 hours a week. Help!

[Veglib]

Hi there,

I've just gone back to work and I am not happy with my 14 month old son's nursery and every fibre of my being is telling me to get him out of there asap :(

I only have to cover 2 mornings a week and I'm meeting a nanny with her own child to see if she can watch him. We are paying 260 per month for nursery and she is charging £8 per hour so it's an increase.

If we go for this option, I literally have no idea how it will work in regards to payment. I kind of assumed she would invoice me but looking online tonight it seems we may have to set up our own payroll system???? Would this make it too expensive? I only work 2.5 days a week and my mother in law will cover the rest, but I also have travel expenses of 40 per week and only earn 30k which pro rata is 15.5k myself! Love working, but have to make sure my boy is being well cared for and also make sure I'm not paying to work!

Please help explain how hiring a part time nanny works. I'm a desperate mummy and it would be much appreciated.

P.S. I looked at local childminders before choosing the nursery and didnt find the right fit, but looking at some more childminders may also be an option if a nanny in our own home wouldn't work.

For just 2 mornings a week I think a childminder would be a better arrangement /less hassle.

The payroll costs will mostly be admin fees, as the earnings level is likely to be below the threshold for National Insurance.

You have a duty as an employer to report earnings of your employer to HMRC plus have a pension scheme available. You can do that yourself but it can be a bit of a learning curve, so there are nanny payroll providers who will do it for you, cost varies but you are probably looking at £150-£250 per year in admin fees.

As I understand it, you are that nanny's employer, so will need to pay pension and NI and other 'on costs' on top of that £8 ph. If they get pregnant themselves, then you have to give maternity leave and pay etc. It ends up being more expensive then £8ph, as presumably this is a net figure for her not gross.

A childminder could work better - they are self employed and you'll likely pay monthly in advance. Particularly if your nanny has another child to care for anyway.

Are you getting childcare vouchers from work or are you using Tax-Free Childcare. Either of those schemes can be used to pay a registered nanny (is the nanny registered?). Tax-Free Childcare for every £8 you pay, government adds £2 (up to max of £500 top-up per 3 month period).

Does the nanny have any other income? It's a bit risky to rely on them never having any other income but IF they did not have ANY other income then you may not need to run payroll as long as you never paid more than £116 in any given week. You must get a written statement from them stating they have no other income.

Other things, you must provide a contract of employment. You can find examples online such as at nannyjob.co.uk though it will need adapting for a part time job (ACAS has a guide to how holiday pay is calculated).

Maternity pay is not an issue as nanny would be earning £80 per week or less, so under the £116 per week threshold. The nanny if they became pregnant would need to claim maternity allowance which is not paid by the employer.

When discussing pay always make sure you say that it is Gross pay. That way if the employees tax situation changes you are protecting yourself from rises in your costs.

I’d go for childminders or look for a diff nursery, nursery and childminders can be cheaper in the long run... tax free childcare?
Nanny’s you have to employ and pay pension contributions etc so not great

Nannies provide 1:1 care, not group care so it is like comparing Apples with Oranges.

At the pay level the OP is talking about there is no pension payment by the employer. The main cost is admin which is around £20 a month, so not a huge amount in the big scheme of things.

Thank you so.much for this information. Nannynick you've been really helpful. I thought it would work in a similar way to a childminder, but it seems there is extra admin to consider. I'm meeting with her tomorrow so I can ask her more about the logistics of pay and check about tax free childcare.
Really hoping it's viable.

Thank you x

Lets say it is 10 hours per week at £8 gross per hour.

So £80 gross per week, which is £4,160 for the year (52 weeks).
If paid monthly, that is £346.66 gross per month (with one month being £346.74)
So based on 2018/19 tax year figures, as £346.66 is less then £503 per month, there is no National Insurance or Employers National Insurance.
If payroll and pension admin comes to £240 a year, then your cost for one year is £4160+£240=£4,400 which is equivalent to £366.66 per month, or £84.61ish per week.

With a childcare cost of £4,160 (alas I don't think the £240 admin is claimable under Tax-Free Childcare as there is no facility to pay it out to the payroll provider), each month you would pay in £277.33 and get £69.33 top-up, giving you £346.66 which you then process as payment to your nanny (note: it takes 3-4 working days for payments to be made out of TFC at the moment).
So your cost is £277.33 x 12 = £3327.66 + admin £240 = £3567.96
Or there about... could be out by a few pennies.

You will then have activity costs on top but those may not be very much, if any depending on what your nanny does and the resources you have at home. If your nanny drives and takes your child out somewhere then there would be mileage cost but with a nanny you can control what they do so you can decide that they walk to places if that is possible, not drive, so keeping cost down.

Thank you for being so helpful nannynick. I'm definitely thinking it may be a more flexible set up for my son. She can nap him on the go and take him to groups etc. I think it might be worth the additional cost for me to keep my job until we get free hours. Worried about making another change for him as he seems to be exhibiting signs of stress this week and i just want to do what is best for him in the long run. I'm finding it very hard to leave him with strangers and knowing he's unhappy. We are weighing it all up this weekend. X