Looking to employ a nanny for 5h a week. Nanny payroll or HMRC basic tool?

[charlieclown]

I welcome guidance on this. We are looking to employ a nanny for after school 2 days a week. She also has self employed work.

My research and understanding is as follows:

• It will cost us approx £250pa for a nanny payroll service, and a further £100 for Employers Liability Insurance.
• Although the service will generate all the paperwork we will also need to do the actual paying of her.
• I am expecting her salary to be approx £250per month gross, although we only want to pay her term time only so it will be more like £180averaged out.
• Her tax allowance will be used first by this PAYE employment, so if we pay her £11ph she will get to keep most of it, and we will not pay employer tax and NI on top of it. Nor pension auto-enrolment
• I dont know whether her self employed earnings will take her over £10k pa or not, and I am not sure whether I need to worry about this (that we would then start having to pay more in tax/ni -)

I understand we can do a more basic payroll through HMRC, and am wondering whether this is a good idea given it is such a low cost arrangement - the nanny company is more cost than a monthly payslip.

I welcome views on whether I have understood all this right, and whether I should go nanny payroll or diy. I am wondering about a nanny payroll to start and then maybe diy after we are up and running.

Thanks in advance

Employers liability insurance is usually part of your home contents insurance policy. Do not buy it as a separate policy until you have checked that your current insurer does not already include it, or can add it as the additional policy cost may not be as much as a separate policy.

Pension: You would not need to auto-enrol but would need to have a scheme available. Easy enough to do, could use NEST Pensions who have to accept even micro employers. Your employee could decide to opt in, though with the level of salary you are indicating there would be no employer contribution.

Payroll providers will also often include creating a contract of employment. Though you can find some guidance online for doing that yourself from ACAS and some of the nanny job listing sites. You are unlikely to find much about term time only contracts though, so be careful about things to do with the term time only arrangement, in particular holiday pay calculation.

If you do not find you get on with PAYE Basic Tools, you may find BrightPay does what you need... £50 per year I think for a micro employer licence.

You can certainly do things yourself. It may be a bit of a learning curve at first and you need to remember at what times of the year you need to pay HMRC (if anything is due).

What you are looking at doing does not sound very complex, though you never know what your employee brings with them... so you could need help sometimes but HMRC does have a helpline and you can probably Google for info relating to PAYE Basic Tools plus there is a User Guide which could help.

You have understood things correctly. Agree a gross wage and make sure they complete a New Starter Checklist to get the initial starting tax code.

You don’t need to register as an employer as she isn’t paid more than £120/week and she’s not employed elsewhere,
I would put as a condition of her employment that she cannot get another employed job without your consent as it will make things more difficult.
Fir 5 hrs a week TTO if she has other work elsewhere, I suspect she could also be SE for you too.
It’s worth you ringing HMRC and staying on hold for an hour or so to find out.

Thanks this is massively helpful. It seems I am on the right track and this gets me further along.

She has other work as self employed, but is reluctant to do this for us self employed as she is cautious re hmrc. It seems a lot of effort for such a small sum but we are not trying to bend the rules in any way.

As far as my understanding of the definition of self employed goes - she is not paid by outcome, and does not get to choose when she works for us so I thought she was employed. If it might be more of a grey area than that I will contact hmrc.

5hrs a week isn’t a lot but if it is the same hours each day /week abs she can’t send someone else then it is employed work not se

Agree gross rate esp as she self employed as well and may take on another employed role in the future