Paying nanny through tax free childcare account

[excitednerves]

Hi all

For various reasons we have decided to take our two children out of nursery and hire a nanny. It’s the first time we’ve had a nanny so the whole payment thing seems overwhelming at the moment.

Is it possible to still use tax free childcare? If so are there recommended sites (like nanny tax) to use for this?

Thanks!

Yes you can but the nanny has to be ofsted registered I believe.

Yes, it works well once it is setup. In England your nanny needs to be registered with Ofsted. In Scotland you need to use a nanny agency. In Wales your nanny needs to register with the approval scheme. In Northern Ireland I think it's the health board the nanny has to register with.

Nanny payroll companies do not get involved with Tax Free Childcare. They produce the payslips, and tell you how much to pay to pension, how much to pay to HMRC and when do so. Tax Free Childcare is separate to the process of producing payslips, and doing PAYE (taxation).

There are many nanny payroll providers. In the past I have had employers who used www.NannyPaye.co.uk and www.PayeForNannies.co.uk without any issues.

Once you get used to how things are done it does get easier.

The process will go something like this:
Payroll will produce a payslip and email you a copy.
You log in to your Tax Free Childcare account and make a payment to your nanny of the Net Pay amount shown on the payslip. The remainder of the money sits in the Tax Free Childcare account, waiting to be sent to HMRC once every 3 months.

Sometimes you will need to split the payment between both child accounts, as you will hit the £500 topup 3-month period. You may have come across this when paying nursery, or nursery may have wanted payment from each child account separately.