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.

I really don't understand why so many people with nannies fail to notice that they are employers who have the same legal obligations as any other employer. Especially as people who can afford nannies generally have jobs at management level, so employment shouldn't be a completely mysterious subject for them.

I did my nanny's tax and NI myself - a bit of a hassle but not really impossibly complicated. You pay on the simplified domestic scheme so only have to fill in the forms and send off tax and NI quarterly.

Where did you get £80 of tax on £400 of gross income? And then you are going to give that £20 to the nanny anyway for transportation costs while she looks after your kids. And what about food, rent, clothes, your own expenses to get to the job that pays these things?

As far as I know the vouchers are only good for your first £55 of income each week. (that figure might be out of date) Big whoopie!

How come partners in law firms are self-employed?

(sorry if that's a really dense question)

Surely there must be some way around the system? It's quite unusual for both parents to be self-employed so maybe it could come out of the employed parent's salary? Or if both parents own a company then one parents becomes an employee for tax purposes.

Sorry Eleusis - figures weren't accurate, they were an example. I couldn't be bothered to work out what the proportion of tax on £400 was so I plucked a figure out of the air. Gross salary is rarely going to come to a nice round number either.

It was only intended as an example to show the potential savings. Maybe I should have done it as a gross salary of £1000 a week to make the maths easier.

Technically as a partner (or member of a LLP) you are self-employed and pay tax under that schedule/regime. Vouchers are not available. The entitlement is not transferable either, so although DH can get vouchers, he cannot have any entitlement to "mine".

Don't think you can just make someone an employee of a company to get this benefit if the actual work patters do not stack up - technically wouldn't that be some sort of tax fraud?

As I say, am not expecting sympathy on my behalf, but it must really whack quite a few self employed people.

No idea whether it would be tax fraud or not. I know someone who works for the company she and her partner set up together but who becamse employed by the company so they could use the voucher scheme which is why I mentioned it.

Personally I just inform my employer I expect my tax and NI paid and I am registered with OFSTED if they want to claim the benefits of that scheme. But then again, I haven't worked for anyone who has been self-employed

Anchovy, I think it would be legitimate if you actually did the work you were employed to do. So if you set up a company and subcontracted some of your work to it (say typing) and then you did the typing and earned a salary for your typing services...

But, of course all of this is hardly worth a £50 voucher in my opinion.

BTW, I am no lawyer. Don't take my advise.

Basically, I can't be arsed to go through all the hoops that are the approval process. My nannies are generally foreign, so there's no CRB and I quite frankly don't see the point of getting one. Then, there's the length of time it takes to get the approval through, meanwhile stocking up on vouchers I can't use... and so on.

What's wrong with a tax deduction? Why does Gordon not listen to me? Do you think he reads mumsnet and knows what I think of him????

I almost lost a mother's help a few years ago because I insisted that she would pay tax and I would pay NI when she worked for me. But I have seen what HMRC can do when they crawl all over someone's affairs and I don't want that to happen to me!

Like another poster, though, I do pay ad hoc babysitting cash in hand. And the Christmas bonus

It's also the national insurance and the benefits that come with it that are so important - like pension, maternity pay etc. If you pay your nanny without national insurance, you leave him/her without those sorts of benefits.

It is a lot of money - I'm about to set myself up as an employer again but it's all part and parcel of having a nanny.

And eleusis, you know you'll never get a tax deduction ! Can you imagine HMRC trying to verify who was applicable and who wasn't (i.e. who was using childcare and who wasn't)?!

I must look into these vouchers. I wonder if it's a big hassle to arrange.

Vouchers are a PITA to set up, according to DH (I too am self-employed) but we have done it since the word go and those savings just keep coming in, month after month

PITA putting it a bit strong I think - it's just a rather long sequence - send off application form; get acknowledgement saying wait for interview call; get interview call; do interview & be told to wait for CRB to come through; get CRB & approval no.; send off approval no. to voucher provider so nanny's on their redemption system ... etc.

I was quite happy letting the sums pile up in my account while the sequence played out - it means for the moment I'm paying our nanny wholly from the "slush fund", without complications of part-payment; and when my slush fund runs low we'll use dh's, which is piling up in the meantime.

PITA putting it a bit strong I think - it's just a rather long sequence - send off application form; get acknowledgement saying wait for interview call; get interview call; do interview & be told to wait for CRB to come through; get CRB & approval no.; send off approval no. to voucher provider so nanny's on their redemption system ... etc.

I was quite happy letting the sums pile up in my account while the sequence played out - it means for the moment I'm paying our nanny wholly from the "slush fund", without complications of part-payment; and when my slush fund runs low we'll use dh's, which is piling up in the meantime.

Gosh, double-post, haven't done that before. Sorry

I was wondering about setting it up from an employer perspective. If I did set it up here, I think only 1 or 2 employees other than myself would be able to use it as lots of people use au pairs.

But I also see you can do salary sacrifice or directly pay the childcarer....will have to look into it. I wonder if I can do it directly with whoever supplies the vouchers or if I have to use an intermediary because they will probably charge for their services.

miniegg. It is entirely your call but remember:-

1. If you get caught it is you who gets fined, not her.
2. If she is a good, experienced nanny, chances are she won't want to work cash in hand.
3. If she is willing to work cash-in-hand, chances are it will be on a 'let's split the difference' basis and she will then earn more than she would otherwise and still have the ability to demand you pay the tax on top of that if she wanted (you will I presume have a contract? If not you are open to an awful lot of problems, never mind tax issues)
4. Length of arrangement isn't really much of an issue: once you've mastered the P11d form and the manual tables and remember to make a payment every qtr it doesn;t matter if you employ a different nanny every month. It is a breeze to do - takes about 6 hours to get the jist of it all, and then about 1 hour every 3 months to do the paperwork and pay HMRC (call it 2 hours when you do the qtr to April, because you have to summarise everything and send another form in). Even when your current girl leaves I assume you will replace her, so you are only delaying the issue anyway.
5. If I am right in assuming that she hasn't done any taxable work yet this year, then there will be no PAYE liability for this year anyway (until April) - only NI contributions. Then if she is not completing a full tax year next year you could theoretically claim back some PAYE when she goes (though I've never bothered)
6. There is a brilliant telephone advice line to get you through the palava - really brilliant. you phone them up and they will send you exactly what you need and they will if you want even calculate the numbers for you and tell you what to put in which box on the forms.

I'm not going to enter the moral debate on any of this. It's your call. But what you suggest has a hell of a lot of potential downsides for you (and none, by the way, for her).

BTW If I was going to be hiring someone with no experience for a temp period, I would be looking at paying much less than the average nanny wage, so the tax add-on shouldn't be too onerous.

You can get more than £55/week vouchers. But the additional ones are only free of NI rather than tax as well. Also with my company scheme we sacrifice £9.50 to get a £10 voucher.

The only one of my employers that have wanted to only delclare part of my wages, in my 15 years as a nanny, worked for the inland revenue!!

is there a central/government provider of these vouchers because all I can find are companies that provide them (who no doubt take a % or set fee) grrrrrr

My DCs (private) school also accepts the vouchers in part payment of fees, so for the moment we don't need to go through the hoops of registering our nanny

You can use the vouchers for private school? Really??? Tell me more.

Eleusis perks up up and reconsiders the validity of this scam scheme.

Anchovy - is that beyond nursery stage? As I have heard of it for that, but not from reception on - reason being that nursery stage is usually Ofsted-registered (even at private schools) (as are afterschool clubs, sometimes) but reception upwards isn't?

Yes, sorry, DD is in nursery and we can only use them for her. I think it might extend to Reception as well (I think it might be an "under 5" thing), but basically it is similar to the nursery grant.

We cannot use them for DS, who is in Year 1.

School is v efficient and has the system set up in a way that makes it all v straightforward.

When DD is no longer eligible, according to DH we will either register our nanny or have another baby!

"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!"

I am not a nanny, and I am het up about it. I think that people defrauding the taxman ARE basically dishonest.