ok, be honest, mums who employ nannies- do you...

[miniegg]

do it all by the book and pay tax? we're all anonymous here, so...??
I'm only just embarking on this and not sure whether everybody does it properly or whether a lot of people just don't bother, because for one thing, you never quite know how long the arrangement is going to last etc.
I'm going to be taking on a part time au pair/mother's help type. She's only 22 and is on a gap year from school in Germany, before going to university there. She'll be working for us between 30 and 40 hours a week. I'm not sure how long she'll be with us - could be months, or could be a year.Do i REALLY need to go through all the tax palava?
And yes, I do know about that nannytax website. Scary.

Hi I worked as a Nanny years back prior to children and quite a few families...okay all but one would pay at least two thirds legitimate and then would top the rest up in cash on the friday.....as often I would have done extra hours babysitting etc so as long as you sit down and set exact hours for paying legitimate and then top up with babysitting pay? I would say that to cover yourself you should bother with the tax palava a family I know didn't and it ended badly. Good luck!

Lots of people probably don't but I'm not one of them. For one thing, if you get caught the fines (on the employer) are large. Also, if your nanny cannot show pay slips, or her pay slips reflect a lower rate of pay, this will affect her ability to get credit, a mortgage etc and may also have a bearing on what benefits she is entitled to if she is ill or pregnant.

Most importantly of all, from a moral point of view, I couldn't reconcile trusting my children, who after all are the most precious thing in my life, to someone and expecting them to take good care of them while on the other hand I am defrauding the tax man and denying them benefits!

However, if you say that this girl is on a gap year and going to be working as an aupair, does that mean she will be living with you? Also, if you are paying her as an aupair, this is generally only about 60 pounds per week so she will fall below the threshold for paying tax anyway. I think you can pay up to about 90 pounds pw without incurring tax - someone with the exact figure will be along in a minute!

In general I think if you need to pay tax for someone, then do it.

What is her weekly wage? If it's say £120 per week you aren't going to pay very much tax anyway, and it isn't really worth being a criminal.

If you are paying her £500 per week, then you might find the taxes a whole lot more painful...

I always felt really bad about not paying the tax, and couldn't live with the guilt (even if the amount we had to pay was sometimes crippling).

Plus, more importantly, if I hadn't done it legitimately my nanny wouldn't have been able to get her mortgage.

hmm, she's not an au pair as she won't be living in. So I suppose she's a nanny, though she doesn't have nannying qualifications and is basically a school leaver so not got lots of nannying experience either.
can anyone give me a very ballpark figure, as to roughly how much extra tax adds to the cost?
eg, say we've agreed to pay her £250 a week (not the real figure!), how much more would we end up having to shell out, approximately? are we talking 10pc? 20pc?

My ex employer didn't want to pay full tax as they said they had already paid tax on the money when they earnd it. (True) Did mean I couldn't borrow as much for my mortgage though.

she won't be looking for a mortgage or anything like that - she's just spending a year in the UK to improve her English. she's going to work three-four days a week with us, for £260 a week.
I'm giving her four weeks paid holiday, and sick leave,of course.
I do resent the idea of having to pay tax on top of that - feel the same as your ex employer, NAB3wishes!

There are various net-to-gross calculators (which is what you want) on the web - nannytax has one itself I think. Also bestbear.co.uk, last time I looked.

We're legit with tax (do it all through nannytax). I know a fair number of childcare employers, & don't know anyone who just does cash in hand - but then the people I know are employing full-time (or thereabouts) sole charge professional childcarers ... so it's obviously going to be at the formal & "proper" end of the nanny spectrum.

If you're looking to save money, see if you can get childcare vouchers through your or your partner's employment - aimed directly at that double-whammy of tax (ie you paying a nanny out of your post-tax earnings)

I am interested in the replies here because I am a part time nanny earning the maximum allowed (£100pw)
My employer has just asked me to work more hours.
I asked for us to discuss the implications re tax and national insurance.
I have informed myself on the facts and figures but was met with almost an air of discust.
I'm afraid that my employer reacted to this in a way that left me in no doubt that she considers me and my financial affairs to be completely insignificant.
I adore the children and actually would have enjoyed doing more hours... but to be told "it's such a pathetic amount of money, it's not worth the bother" has made me wonder if I am respected at all.

gosh, yes, I agree, PellMell. It may be a "pathetic amount" to her (in which case perhaps she can afford to pay you better!) but i'm sure it's not to you!
I don't like the idea of the nanny having to pay tax on what I am paying her either, as although £1050 a month seems a huge amount for me to be shelling out, it's not a great deal to live on in London, that's for sure.
I also want to avoid the hassle of loads of extra paper work, especially if the nanny doesn't stay long (how can I know whether she will or not?)

I think you are making a lot of excuses not to do the right thing.

I have employed nannies for almost 9 years now and they have always been properly accounted for from a tax and NI perspective.

Why do you think you should be any different from all the other employers who treat their staff properly?

I have been in household staff recruitment for 12 years and most nannies/household staff want their tax and NI paid. They want to be able to demonstrate to a building society/credit card company etc that they are lawfully employed and their tax and NI paid. There are of course always exceptions to the rule and there will be candidates who will accept less declared or none at all espcially if that means losing a job. So it's up to you but 30 or 40 hours a week is taxable as she is not an au pair. Also please be aware that they cannot be self employed and the onus is on you to pay it. Whatever her net is add 25% for tax and about 12% Employers NI. It's a fortune and alot of people just pay it. If you do go ahead and need a payroll company look up NannyWage as they are much cheaper than NannyTax and offer the same service.

Best payroll calculators I have found are:

ListenToTaxman and E-Gismos
As employer you need to use both, to get an idea of how much Tax, NI and Employers NI are.

Figures are for 2007/08 Tax Year
Based on Gross Annual Salary of 16,432, 316 per week, tax=42.27, employees ni=23.46, leaving Net Wage 249.97 (as close as I could get to the £250, I am assuming the figure of £250 was the take-home pay) - figures from ListenToTaxman (must not be used for PAYE completion, figures are a guide only).
Employers NI is 27.65 (via E-Gismos)

I would suggest playing with these two websites, to get figures that represent better what you have actually agreed as Gross salary.

A unqualified, inexperienced nanny I feel would be classed more as a mothers help, than an au-pair.

I do know a fair number of people who pay part on the books and part in cash, avoiding a large chunk of the tax birden. This enables them to give more to the nanny than they could afford if they were giving it to the tax man. Nanny is therefore happy that she gets more even if it is off the books.

You will not find anyone on mumsnet to confess to this routine. But, I can't believe it doesn't go on.

My last nanny told me that most of her nanny friends (and she had quite a few) were paid part in cash.

I have no moral highground when it comes to paying taxes to this irresponsible government. However, I do fear the tax man. So, I signed up to nannypaye and do it by the book for the sake of keeping myself out of debtors prison.

Good for you, soapbox, being so right on - i haven't your 9 years experience as an employer, which is precisely why I am seeking the benefit of others' experience on mumsnet.
i don't have any intention whatsoever of "not treating her properly". If she'd rather pay tax, then we'll do it that way.
i'm quite happy to admit, that like most people, I'd rather not give any more than I have to, to the taxman, or have her shell out, any more than she has to, to the taxman.)
This is not supposed to be a political discussion -i'm just trying to get an idea of how many people do everything formally, and how many just pay cash in hand, in a situation like mine.

The admin for paying the tax is not really a big problem. Rumour has it that you can do it yourself if you have a modicum of intelligence (and the self-discipline to do it!) but although I value my nanny, I would be constantly missing the deadlines with IR for tax stuff so I use Nannypaye (also considerably cheaper than Nannytax). From memory, you fill in one form and send it off to the payroll bureau with your cheque and payslips magically appear on your doorstep and once a quarter, a tax and NI bill for the IR - that's the not so nice bit! Based on how much you will be paying your help, it's really not fair not to employ her properly. Although I have to say, 260 pounds sounds quite generous for 4 days a week - when you say she is an aupair/mother's help does that mean she will be halping you but without sole charge of the children? Also, if she does leave after a few months, presumably your childcare requirement will remain fixed so you will need someone else anyway? Not knowing how long someone is going to stay is not really a good reason for not paying their tax

Miniegg, there is also the issue of being 'found out' if an employer falls out with the nanny and the nanny reports it. I haven't heard of this happening but the onus is on the employer. I hate paying tax, everybody does and I think there are many many employers who do pay cash or part cash which does save money.

It isn't about what she would prefer, it is about your obligations as an employer!

It also isn't about being 'right on' but about acting legally.

If you cannot afford to pay properly for a nanny then find a cheaper form of childcare.

Miniegg, it's not up to the nanny to decide what she would prefer! If you don't pay her tax and are caught by the taxman, they won't accept that as a valid defence! And you pay the fine, not her.

Chicpea a nanny friend of an old nanny of mine worked for a family who were fined £3000 plus made to pay £6000 of back tax and PAYE. They had told the nanny that they were paying the tax and NI but obviously hadn't done so! They lost the nanny too, as she didn't want to stay after they had betrayed her trust.

Sorry miniegg, don't mean to sound sanctimonious, I think the reason people get wound up about the "cash in hand" situation is because we ALL resent having to pay tax for our nannies out of already taxed income and unfortunately, people who deliberately pay cash in hand (not people like you who are just trying to test the waters and see what the accepted/correct practice is!)just make things difficult, and more expensive, for the rest of us. It can't be fun for the nanny either.

I doubt anyone would admit on a public website that they didn't pay their nannie's tax/ni. These days from my experience, parents pay the taxes - some will also agree a Gross wage, not net. I have heard stories from nannies, about trouble getting Tax/NI paid, so yes, I do expect it does go on, but I also expect they go through a lot of nannies.
Taxes in germany are higher than here I believe, so I expect your nanny will prefer paying UK tax (you are paying the employees tax and NI on your employees behalf - it's called a deduction) rather than tax in Germany.

Since she is live-out, and assuming she works 40 hours per week, minimum wage is £5.52 (not sure how old she is), you will have to pay her about £220 per week. According to nannytax, that will cost you about £293 per week. This is the least you could legally pay a live out employee. If, however, she was live in, then there are no minimum wages laws.

Oh, I am so stupid. minimum wage is a gross figure, not a net figure. So my last post is wrong. Sorry!

When we had a nanny a while back, with our first child, we paid the tax. Shortly thereafter we discovered that we seemed to be the only ones who did and felt like real suckers. I'd still pay the tax if we did it again, but I'd like to see an end to nanny rates being quoted "Net", starting with the agencies, which seem to turn a blind eye to all of this whatever their brochures say.