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.

okay, thanks for the advice everyone. soapbox, i wish I could find a cheaper form of childcare... I've been looking for a nannyshare for four months, in the hope of making it more affordable, to no avail.There are no nurseries near where we live that accept babies as young as my DS. I have no relatives nearby to help, and to my surprise and dismay, the childminders in this area cost as much as having a nanny.(£7 an hour.)
So, the nanny's not a luxury - it's just about the only option. and I'm just trying to do my best, all round, for everyone. thanks for the figures, Gloria, that's helpful.

thanks for those figures too, nannynick. will check out the websites.

Employing my first nanny, I am both overpaying (I think!) and also going through nannytax. I have been involved in HR stuff through my jobs without having an HR qualification, and find it so phenomenally complicated that I just don't want to take a single risk - most of the sleepless nights and horrible meetings I have had in my work have been due to HR messes, often mistakes made by me and I'm just not going there. It will all cost much more than a bomb but at the moment I don't care. We're lucky in a way to have had a low income for 18 months, so now dh has got a job HOORAY i don't really care if most of the increase goes on childcare, esp as we are within sight of the costs reducing (ds is nearly 4.) I'd agree it's a lot of money though.

I would agree about quoting net salaries, I think it's just weird. I've never earned net money for anything, why do nannies?

I was in a nannyshare for 3 years though and just paid the employing family - I always understood they paid tax and NI but never actually saw any evidence, though I do believe them. I don't know how legal that really was tbh.

(I do have a political view too but won't go into it!)

What was that post Gloria?

Did you mean, don't bother committing a crime unless it's worth it?

Blimey.

Quattro, I thought Gloria/Eleusis was just trying to calculate what is the minimum amount miniegg would have to pay her nanny/mother's help. I believe an earlier poster said that £260/week for 3/4 days' work is a lot.

"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... "

Speaks for itself really.

I say again - Blimey!

am slightly wishing i'd never posted on this subject! feelings on this subject seem to run really high!

as a nanny i would NEVER work for a fmaily who resfused to pay me properly

I would be more than happy to report you to inland rev for not paying me properly though and they give you a £3000 fine as well as all the tax you havent paid.

I feel very strongly about this by the way.

If you dont want to be an employer... dont have a nanny, OR dont live in this country cause they way it is in this country is that you HAVE to be an employer if you want a nanny and that the nanny has to be employed.

We dont meet the criteria for being self employed end of.

Yes my bosses pay me properly (or at least they try to) all of them always have done.

just to add... YOU arnt paying your nannies tax, SHE is. In the smae way anyone who works in this country recieves the money MINUS the tax deducted.

If you wanna work in this country you pay tax, end of

Miniegg
Don't worry about it - these things always get really heated. I thought it was a brave post and was glad you did it! The tax/NI situation is the big white elephant in the room IMO.

With our first nanny, I believed her when she said she could be self-employed. I had taken a tax course and thought since she was working for us part time and planned to have other employers on her days off, this was okay. The big problem with informal arrangements is what to do if things aren't working out - I felt very vulnerable when I realised we weren't doing things properly which also coincided with the time we really began to have issues with her. It's so much easier if there's a proper contract and things are all above board.

Quattro, you are putting words in my mouth. I said no such thing.

The taxes are painful. I find the whole system nothing short of outrageous. The government should do something about the extortionate cost of childcare in this country. Taxing us on already taxed income is hindering working parents, not helping them.

It's no wonder parents choose tax evasion... out of desperation. I'm not among them. But OF COURSE it goes on. I am currently seeking a new nanny to begin in March. And, over the weekend one of the initial responses to my ad said "cash is fine" at the bottom of the e-mail.

agree with Gloria's last post

another point of view here - I've worked as a nanny and if the family are mean and don't want to pay me properly then it just puts me off the job no matter how lovely the kids are.

your nanny will talk £ with other nannies and if she finds out you're not paying her tax and ni she may be put off the job thinking she's doing something illegal

agree though it's not fair taxing parents then expecting them to pay nannies tax, seems a double whammy

I'd say just set up the tax and ni for your nanny, you'll not regret it, it's not forever!

Hang on

Who pays the tax here, the employer or the employee?

When you get paid by you boss, you pay the tax

So the employer (eg parent) has virtually no tax liability

You only need to pay NI (11/12%) which is insurance against the nanny being ill & needing sick pay (or maternity or whatever)

Or am I misunderstanding

KM with a NANNY THE EMPLOYER (MUM OR DAD ) pays the tax, the nanny gets paid her wahes net

no - she pays the tax same as you do

I employ people I physically pay the tax - but it is part of their wages

Surely Nannies are the same

They have a tax code
They have a tax free allowance
The tax paid is on thier P60 not the employer/parents

So it is them that is paying the tax

If it is credited against the parents NI number them it is the parent paying the tax - if it is credited against the Nanny's NI no it is the nanny paying the tax

Surely?

ah true!

Katy, the confusion arises because nannies often quote their desired income in net, hence asking parents to then pay the taxes for them. This is of course not something I would do. Pay is in gross. I send in the taxes, and they come out of the nanny's paycheque.

However, a nanny who isn't paying taxes is generally willing to work for a smaller amount (because it's tax free). So there is an advantage to both sides. Also, the nanny can continue to collect any low income benefits she might be getting from the government. Ther eis so much room for corruption on both sides in the current system. I don't support any of it, but it does happen.

If we made all income which is used for childcare (childminders, nurseries, nannies) tax free and then collected the tax on the nannies pay, I bet a lot more people would pay the nannies legitimately. Say, I pay the £1500 per month, that £1500 should be deducted from my income before my tax is calculated, but it shouldn't affect my pension contributions (like the stupid voucher scheme does). The only way I'd get that tax deduction is if I paid my nanny legitimately. And it would certainly help working parents. But, that isn't what the government has in mind. They want maximum tax collection, and who cares who they have to impoverish to get it. So, you get parents who have the same loyalty to tax system that the government has to them. And, these attitudes didn't start and don't stop with nanny employers. Lots of business men and women, I'm sure, are quite happy to participate in diddling the tax system. This is nothing new.

When are we going to vote Labour out? Oh yes, that's right, when Gordon calls an election.

snowfun you are wrong

the nanny pays her tax...

as an employer you pass it on to the HMTC

• HMRC

nannyL, see my last post!

I know!

When I've employed a nanny I've always accounted for tax and NI but I work in a field where I cannot afford to give HMRC the chance to crawl over me. I will still pay ad hoc evening babysitting (non-contractual) in cash, but would put any overtime (eg from me working late) through payroll. The latter is a fairly grey area in my view of the law, but HMRC would probably disagree!

I would say, based on my experience as well as those of others I know who have employed nannies, is that this also reflects the fact that many families fail to realise that they are employers and that their nannies are employees - who have rights just like any other employee. Somehow there seems to be this view that because they are in our homes and working for us rather than a company that this isn't the case!

I remember talking about having to pay my nanny redundancy when we no longer required her services - so many people were horrified that this might be necessary! Yet they have clear employment rights like any other employee - sick pay, maternity pay, etc.

None of this is helped by nannies themselves who often don't behave like employees either. Wanting to be part of the family/friends with the family is lovely, and we had fantastic relationships with both our nannies, but it can muddy the waters. Similarly, asking to be paid in cash, or net - a practice that agencies should discourage - makes things worse.

Yes, it's hard paying tax/NI out of already taxed income, but please make sure you'[re aware of all of your obligations as an employer when you take on a nanny. Maybe it would help if you thought of yourself as a company! Family X PLC!

nannyL, i totally respect your views, but please, I don't want a big lecture! I work full time and happily and readily pay my taxes on my income.
For the record, I think taxes are a good and necessary thing, and don't seek to pay as little as possible.
This is clearly a confusing area for many parents - what I looked for when I put up this post was some idea of common practice (not best practice, though of course we should all aim for best practice!) particularly for people just starting out on the whole nanny employing journey.
It's clear from the answers here, that it would be wise to start paying tax right away. It's also clear from the responses that it's not uncommon to "play the system" in one way or another.
I can perfectly see why you don't agree with this, and I understand and respect that.
BUT I suspect the people who don't do everything 100pc by the book are not basically dishonest, or against taxes, or bad people, - they're simply families trying to make ends meet, trying to make it worth going back to work, etc in the context of a system that doesn't give working mothers nearly enough support.
As I said before, this was not supposed to get too political, but I can see why nannies feel strongly about it. it's an interesting debate!

You can pay your nanny before you pay your tax if she is approved by OFSTED with a salary sacrifice scheme (often vouchers).

SO:

Most people seem to do
"your gross wage" - "your tax and NI" - "nanny's wage + tax + NI" = what you have left

You can do:
"your gross wage" - "nanny's wage + tax + NI" = "your new gross wage" which is then taxed

So if you earn £400 a week, and you pay your nanny £300 a week including tax and NI, you're currently taxed say £80, leaving you with £320 to pay the nanny, who takes £300 and leaves you with £20 spending money.

If your nanny is registered you pay her out of your gross wage, leaving you with £100 which is what you're then taxed on.

It's worth the £100 to get your nanny registered. And you then know she has some form of qualification, a CRB, a 12 hour paediatric 1st Aid and insurance.

DISCLAIMER - I am not being paid by OFSTED to promote their scheme, I just like it a lot and consequently evangelise about it.

Frannikin the problem with the voucher scheme is that it is not available to the self employed, which is technically what I am. Now I know that people rarely have any sympathy with partners in law firms , but it does piss me off - and seem an enormous anomaly - that it is not available in this way. I suspect it affects quite a lot of people.

I assume it is because it is so open to fraud, but would be interested if anyone knows the real reason.