Paying for a Nanny with universal credit?

[Pinkpan]

Hi everyone,

I need some help/info, I'm a registered nanny with Ofsted, and I've have some enquires from different potential families if they can pay me using their UC.

When doing research it's all a bit confusing, so I thought I'd check if any families or nannies on here would know the answer?

Thanks so much!

They can claim some child care from universal credit as long as you are ofsted registered. I'm not sure why they are asking you? They don't pay direct to the nanny..
the parents can claim up to £645 pm for ofsted registered nanny.

They can claim up to 85% of the cost, limited by a cap. They pay up front and claim back.

Under tax credits, the cost to the employer that could be included in the claim was the nannies gross salary and employers NI.

www.gov.uk/guidance/universal-credit-childcare-costs

Thanks so much for the help :-)

I think they were just asking in case I knew, but I'm unfamiliar with doing it that way so thought I'd check.

Thanks again for the help.

You would need to provide them with receipts when they pay you, that's the only impact to you as they would pay upfront then claim back with the proof of payment.

@Danikm151 Most nannies would be an employee, so would get a payslip from the parents. So how would proving a receipt help? Do UC not accept the PAYE info and employers payments to HMRC as evidence?

did you ever find this out because I want to employ a nanny but can't for the life of me work out how?

Do you know how UC work this out, I've been trying for months to get an answer and nobody knows....

@nannynick Could you tell me how parent did this under tax credits? for UC , If i employ a nanny, I would be her employer and paying her and then claiming 85 % back. So I would have about £66 a month to pay the employer contributions. Would I calculate her tax and NI contributions and keep these aside in an account to them pay HMRC? then pay her the NET salary and then claim this back from HMRC?

@Arowley The theory is that you claim childcare cost which is gross salary plus employers NI, employer pension, payroll admin. Exactly what costs UC accepts is unknown, but those to me sound reasonable.

85% will have a max cap. So UC won't pay 85% of all that childcare cost, it would be up to a certain amount which depends on your circumstances.

Would love to know from anyone who has managed to do this with UC, exactly what they do allow for childcare cost.

HMRC PAYE is completely separate to Universal Credit.
So you would keep aside employee Income Tax, employee NI, employer NI and pay those quarterly to HMRC.
If Universal Credit counts that money as part of your savings is potential problem. There is a strong argument for it not being 'savings' as it is earmarked for paying the tax bill and it is HMRC who has decided that small employers pay quarterly.

@nannynick hey, thanks for your reply!

i’m contact with a specialist work coach and got her on the case 🤣

So, seems I calculate Gross pay, keep aside Employee NI AND tax, and then my NI employer contributions, and then pay this to hmrc myself

found a great nanny and she is SE, sets her own rates , own working terms etc she’d come to me Tues and Wed 7:30-5:30, but someone said I should employ her but she works for many families 🤷🏽‍♀️

weird cause childminders are self employed and set their own terms etc but they cnt just turn round to families and say nope not working today but yet nannies can’t be SE so easily 🤷🏽‍♀️🤷🏽‍♀️😬😬🫢🫢

Working for many families can indicate a business is being run, but you want someone to do specific hours, on specific days. You want the same person to come, not someone else they decide to send. You want consistency. Mutuality of obligation is likely to exist... you are obligated to provide work, they are obligated to do it.

Therefore it likely is an employer : employee relationship.

I have two one day per week jobs like that. I also do occasional temporary work and evening babysitting. That temp work and babysitting are self employment, as they are one off bookings, not something permanent.

The nanny may want holiday pay, they may want to be given notice if you want to end the agreement. Their terms may have something about that in, but generally someone self employed does not get paid when they are not working.

The onus is on you to determine employment status. If you have someone do it who is self employed, will HMRC care... probably not, but they could investigate, they could decide that you should have been the employer.

@nannynick Yes exactly :)

this Nanny has been self-employed for the past few years, and has the stands that she dictates the terms of her employment. She just chooses to come certain days a week and at certain times that suit both parent and her :)

she says her and pay rate and she takes on many jobs :)

This could potentially work if you are an ousted registered home childcarer, but check with your local authority

yea, then and it is a registered ofsted home childcarer.

The thing I think it’s very unfair is that a childminder working in their own home looking after three children can be legally self-employed, they said their own rates, they have their own contracts, they agree to look after children on the same days at the same times year-round.

And Nanny, who Nannies for a few family also, does this , yet they’re not allowed to be legally self-employed if they do regular hours. It seems very unfair to childminder is allowed to do that yet and Nanny is not. The only differences nobody can actually employ a childminder, where is a nanny can be employed.

@nannynick so I’ve come up with a solution! Somebody senior from universal credit, got back to me and said that, as long as they give you an invite a new pay them, that’s enough for them. But then, of course you’ve got their problem about the self-employment thing. Childminder is self-employed and they’re allowed to do so. It doesn’t mean the necessarily going to turn around and say right I’m not looking after your children today because I cannot be bothered they do it on a regular basis and for the same families week in week out!

So as long as your nanny stipulates that she says her own rates, she states when she comes to work and when she doesn’t, and when she takes her holiday and when she doesn’t, then as far as it goes, they can be self-employed.
if they are working for a few families and doing babysitting and things like that, it doesn’t matter if they come consistently to your house because they can just turn around and not come.

The issue is as nannynick says that employment status is specific to that particular job, rather than the individual. I had exactly the same conversation with a nanny several years ago (her accountant had advised her she could be self-employed and clearly had no idea what he was talking about).

It's very unlikely that someone could be self employed if they're working two full regular days, with set hours. Someone from universal credit wouldn't be placed to determine employment status.

Personally, I would call HMRC and they will chat it through with you. I did it years ago with that nanny and they explained it to her as well.

You could, of course, just go with that nanny and hope for the best, the issue is that you'd be the one that is chased for NI etc, rather than her. So, it's in your interest to be sure.

Yes, but I’m well and truly prepared to argue with them.

It’s totally unfair that I could use a childminder who is self-employed yet. My child would go the same time same days exactly all year round.

But if I use a self-employed Nanny who works for many families and she just happens to come to me the same times and I’ll be around it’s absolutely no difference.

As long as both parties are concerned, she is self-employed and cannot come any time and I do not dictate to her when to come either. We just both happen to be free at the same time, and there’s no way that they can disprove that because I will say if I took her to a childminder, the exact same thing would apply.

I understand why they do it because they don’t want Nannies to be subject to parents using it just to get out of paying national insurance. And I understand about employment rights. But this Nana who is coming to meet, wants to be self-employed because she works for so many families and she’s got everything above board.

I think if a family wanted to employ somebody and Nanny wanted to be applied, and they were pushing her to be self-employed that would be wrong.

The only other way around it is to employ the Nanny and then use the normal payee system and then she issues you with an invoice, and then you pay her. The invoice can be used for universal credit and you can prove that you have paid her as well, even though she will actually have a wage slip anyway.