Self-employed nanny / tax liability question

[annetteljones]

Hi all

Not sure if any of you will be able to help me with this but I'm struggling to find an answer anywhere else so grateful for any advice!

I am going to employ a couple of temp nannies to cover my FT nanny maternity leave. One of them will go on to my payroll as my employee. The other one is also a PT childminder and just wants me to pay her the gross amount and she will sort out tax and NI. I thought that HMRC does not allow nannies to be self-employed but childminders can be, since this nanny is a childminder she thinks she is fine to treat my work as part of that.

My question is - if I agree to this am I setting myself up to get in any trouble? Am I likely to be liable for paying her tax and NI if she doesn't???

Thanks all

IF she's looking after your dc in her own home, as a childminder, then she's self employed and you should be paying her childminding rates. She will sort out her own tax etc.

If she's in your home, she's working as a nanny. You are responsible for paying her tax etc and the shit will hit your fan if you are found out.

NannyNick is the expert on this.

She will be looking after my daughter in our home but on the other three days a week she will be looking after other kids in her own home.

HMRC will only tell me that a self-employed person is entirely responsible for their own tax and NI but won't comment on individual circumstances not directly related to myself - i.e. they cannot advise me on her self-employed status or whether I would be in the wrong to employ her self-employed!!!

I once employed a childminder as a nanny - she told me that IR had said she could choose to be self employed for her work with me if she wanted (although I ended up employing her becasue I had already set it up like that). Ask the cm to double check with IR - they will be able to advise about her individual circumstances - if she comes back as says its ok then I think you will be in the clear. Much simpler for you anyway.

The IR should be able to guide you as to whether someone is self-employed or an employee. They might not comment on specific cases but they do publish guidance.

I think there is something on their website, but the key test for nannies is whether you would be happy for someone else to perform the CM's duties for you. Most parents would answer "no" - it is absolutely that individual they employ to look after their DCs and substitutes are not an alternative. If the identity of the individual is a key part of the contract, she is your employee. Does that help with your question?

OK I'm not an expert on nanny tax or even income tax (so you may be better waiting for someone with direct experience)

I think the question is whether her work for you is part of her childminding business or whether it is employment by you as a nanny)

It might be that she hasn't considered that it is possible for someone to be both employed and to also be self employed (ie she's employed by you as your nanny for X number of days and self employed for Y number of days)

Whether her work for you is part of her childminding business is a question of fact

Presumably when she is looking after your child(ren) she is not looking after any other kids and is not available to look after other children, this points to her being employed by you. Also if she is in your house this is another big pointer that she is doing something different to her childminding business. You could also look at some factors such as is she getting a different rate? is the contract different?

Given that a nanny is considered to be employed and it sounds like she is acting like a nanny it seems very likely that you will be responsible for paying over her tax and NI (and also paying employers NI).

If she doesn't accept this I would at least get a contract between the two of you that indemnifies you for any costs you incur if and when the s*it hits the fan (as someone else put it). I'd also do this if she says that she contacted the IR so that you are covered

Hope that makes some sense, sorry if I've just stated the obvious or rambled confusingly (DS is whinging!)

How does what the childminder will be doing then differ from using a babysitter /cleaner/gardener? No one would think of paying their tax/NI when used on a twice weekly basis.

I was a nanny for 10 years working for lots of different families in there homes..and they told me i was classed as a "self employed freelance childcarer"..i always paid tax and ni myself.

Could she not go to her house for those days?

If there is an issue about her tax and NI and the Revenue determine that she was in your employment (which they almost certainly will with a nanny-look at the level of control you have for those three days) then yes they will come to you for any unpaid tax and NI. So you could end up paying twice.

If you are going to go down this route make sure that you include in her contact FOR service an indemnity in the event that she fails to make the necessary payments. This means that if the Revenue recover unpaid tax from you, you can try and claim it back from her.

Not ideal. I was in a similar situation with my nanny and decided that I would employ her as in reality that is what you are doing.

I thought Nanny's were no longer allowed to be self employed? Sure NannyL or someone said it changed about 3 years ago? As a childminder, we have an address on our certificate which is our 'setting' and I therefore doubt she could class the work for you as Childminding. I may be wrong, there may be ways round it.

wheresthehamster - cleaners and gardeners are self employed unless employed solely by one person then yes, I suppose the person SHOULD pay the tax etc but usually they are self employed and have rounds they do. Babysitting....well, same really, whether or not they declare their income is up to them but as they are self employed rather than employed, you don't need to worry. The fact a nanny has to be employed (from what other nanny's have said), it's not worth the risk of getting caught is it.

The loophole regarding self employment was closed about 4 years ago so nannies can no longer be self-employed. Is there any reason why the CM / nanny can't have your child at her house for at least 2 hours a day then she is classed as a childminder and then you can pay her as such?

Thanks everyone.

she doesn't live lovally to me and hence my taking my daughter to her isn't really an option but if she is prepared to come and pick her up then that may be an option.

It's a part-time and temp position so it isn't for long but I would be dreading teh call from HMRC for years after! I have no reason to think she wouldn't pay her tax and NI but it just would worry me. Makes no difference to me reaLLY, i've agreed a gross salary so it would mean I'd have to allow a couple of days paid holiday which is fine. Difference for her is she would be taxed at BR on my job as it is second "job" and would have to get adjustment at end of tax year.

Thanks for all advice, am going to speak to her as I'm pretty certain she isn't aware of all the facts round this.

Thanks again

anettle jones it does make a difefrence to you

Cause YOU are responsible for paying your employERS NI contributions, and its that, that they fine you £3k for

but then again.... if its only a few days for a short time, no one is ever likely to find out

AH yeah, hadn't thought about the employers NI but still not a significant difference for less than 50 days work.

Really for me the issue is that I'm paying her gross and I don't want the revenue cxoming after me for money I've already paisd but haven't seen it reach it's destination!!

Chances are she will pay tax & Ni and nothing more will be done, even if she doesn't it is short term and temp so chanes of an investigation are low - but then I am claiming maternity pay for my one nanny so maybe they wioll be interested in understanding why I'm not paying for another to replace her so will look into it. who knows?? Better to be safe than sorry!

Why are nannies not allowed to be self-employed? Is it to protect them or are they just being caught by the same rules that prevent highly paid consultants not being self-employed? Just womdering ...

Thanks again

you need to look at this. If I remember correctly there are still some very exceptional circumstances in which a nanny can be self employed - (eg if you only ever do temp cover and do so for a variety of people with very little regularity - a maternity nurse, I think can do this. covering your nanny's maternity cover might be stretching.

I think nannies cant be self employed becasue the governement have made a list of self employed criteria which include:

Working hours the WE (not our employers) choose
Working in different locations
Working different hours etc each week
Doing what we want, rather than what we are 'told'... and doing different things each week etc

because most nannies have their hours chosen, and tasks specified, and generally work the same / similar hours each week, in the same place etc the governemnet says we are employed

As a maternity nanny and a temp nanny i am self employed but are limited in the number of weeks i can work for a single employer in a tax year.

I would be careful to be honest.