I can see that the average pay in the South East is £12ph gross. Would it be acceptable to pay the nanny less than this overnight as she’ll be sleeping most of the night?
No, not in your situation as you want flexibility as to when that overnight occurs and finding someone who would do that will be tricky.
£12 gross for some areas of the South East will be quite low and in other parts will be reasonable.
Baby is down by the time I leave, sleeps well and would only be awake for 2 hours in the morning before I return home. For example could I pay the hourly rate up until 10pm, then a flat rate of say £40 overnight and then the hourly rate again from 6am?
No, if you were to reduce it then I would not suggest going below National Minimum Wage for the nighttime asleep hours, plus for any hour in which your child does wake, that hour goes to full pay.
So 10pm-6am is 8 hours which if nanny is aged 25+ is £8.21, so £65.68 would be minimum. Sure you may take the view that there are ongoing court cases over nighttime working but I would err on the side of caution and pay at least minimum wage.
Would it be wise to use a nanny payroll service?
Yes. Whilst it is possible to do yourself it takes time to learn how to do it and you now need to do pension administration as well as reporting to HMRC.
I’ve also heard that people usually provide a kind of “kitty”? How much per week do people usually put in this?
Yes, this method is most useful for children's activity costs which are not pre-paid, such as toddler groups. The amount will vary a lot between families. Perhaps start at £3 per day and ask nanny to track expenditure, some weeks will be lower than others. For example, I care for a toddler one day per week and some days we spend £1.50 on toddler group, some days we spend nothing at all, and occasionally we go somewhere on an outing which could cost £10.
So it can be handy to set an amount and let it build up over a period of weeks, so a most costly outing can be done.
Are there any other additional costs I should be aware of?
Employers National Insurance is the big one. The payroll provider can help calculate this once you have set the nanny's gross salary and determined the annual working hours. As you are only employing for 27 hours per week, Employers NI will not be too high but a rough calculation put it at around £1,133 (for 2019/20 tax year).
Mileage allowance: If nanny uses their own car to transport your child, pay them reasonably well for that. 45p per mile is the maximum, based on nanny doing less than 10,000 miles per year. Given cost of fuel and maintaining a car these days I would pay the maximum but like the kitty expenditure, trip distances will vary - they may not even use the car some weeks.
Keep in mind that your nanny must get at least 5.6 weeks paid holiday. Given the overnight working, you need to include those hours when calculating the holiday hours.
What area are you in? I am being made redundant from one of my nanny jobs soon, so I am looking for work - just in case you happen to be in the Ascot/Camberley/Woking area of East Berkshire/West Surrey.
I think your biggest problem is going to the night work changing night of the week. If someone has other work then they could find it hard having the 8.30am finish time and/or the 7pm start time. So budget for the cost of recruiting someone via a nanny agency as well as via an online system such as www.childcare.co.uk and www.nannyjob.co.uk as you may need to use various methods of recruitment to find candidates.