How terrible would it be, IYO, to pay a part time nanny cash? Am I immoral to be even considering it? And how much will it cost if I do it the right way?

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What do you reckon?

I am hoping to persuade lovely woman who currently collects ds from school twice a week, to look after both children after school 5 days, from Sept, in our house.

I am offering her £100 a week + various benefits like paying her car tax and MOT and giving her own child supper etc. I know her well and like and trust her. She may not take it so this is all moot atm. Dh and I work ft oth.

Should I make sure I get someone like Nannytax to sort out her pay and NI etc? How immoral would it be not to do so IYO and to pay her cash?

She has another job which pays very little but where she pays tax and so on.

And if I want her to be paid £100 a week NET how much extra would it cost to pay employers NI etc, i.e. how much will it cost ME, total, per week?

TIA to anyone who can help with either the financial or moral implications.

I am fairly honest and moral tbh and pay my (40%) taxes gladly but want to know the cost implications for me of doing this the right way.

We don't have room for an au pair, sadly. I would do that if we could. I SO don't want them to go into after sch club 5 days a week, esp as it's dd's first term at school. She knows this woman well.

I bet her other job does use all tax free allowances. Almost certainly so.

She may well agree to cash. If so then it boils down to how scared am I of being found out?

I am bit pathetic about things like this, I once used my old key to enter a flat I no longer rented (the landlord had been a BASTARD to me and had moved in there) and a friend and I switched his salt for his sugar and re arranged some pictures etc and I was PETRIFIED for days that the polce would turn up and arrest me. Until dh said "wtf would they arrest you for? Sugar swapping?" and I got a grip.

lol at the sugar swapping

I think you need to know what she earns (gross) from her other job before you can calculate what you would offer her. Before you do that, however, you need to sound her out on the subject of working for you. You don't want to blast her with a huge list of gross and net wage mathematics only for her to say 'I can't do Wednesdays' or 'I'm emigrating in June'

You're right WT I do need to know what she earns in her other job.

and I need to know what her view is on cash.

I think it's a £3k fine if the IR catch you..

If you do decide to not pay tax etc. I'd advise you not to tell anyone IRL and get the nanny to agree the same. One of the 'school mums' nannys told me that she wasn't having her tax paid (she was cross because the mum had led her to believe that they would be paid..until she started working there) and it was soooo tempting to ring and report her when that particular mum was very rude to me (I didn't..because I am lovely..hee hee...but soooo tempting).

£3k, is that all, COMPLETELY worth it then! Thanks Millarkie, agree with you. She has one nosy friend who I wouldn't trust.

Not sure where you are up to with this, so will try to give my view.
As the person will be caring for your children at your home and I expect that you would not be happy with them providing a substitute to do the job on their behalf, then I feel this person is an employee.
Please do not offer NET wages... always offer GROSS, as you do not know what will happen in the future with regard to your employees tax code.
As you would be paying under £700 per month, you could use Simplified PAYE. As the person has another job, you have to do PAYE (either full or simplified) regardless of the income level.
The Simplified PAYE forms on the HMRC website have not (at this time) been updated for 2008/09 tax year, so when visiting the link above, use it as a guide only.

What is £100 Net as a Gross figure?
Well that's hard to calculate, as you don't have sufficient details regarding what other income the person has. Best thing to do is to assume that all the personal tax allowance has already been allocated - thus when in your employment you use tax code BR.
Using ListenToTaxman with Tax Code BR, £128.20 Gross Weekly Pay works out at £100.01 Net. So that's pretty close. E-Gismos (not sure this has been updated for 08/09 tax year yet) calculates for 07/08 tax year Employers NI to be £15.43 based on monthly gross pay of £555.53 (£128.20 per week). So that could be used as a rough figure, perhaps call it £20 to be safe.
So your total Monthly cost is:
£555.53 Gross Pay to Employee
£20.00 Employers NI
Giving £575.53 as total cost to you as the employer. NET pay to employee per month £433.37, with the rest going to the Taxman.

Note: The above is an EXAMPLE, using internet based calculators. It MUST NOT be used for completing PAYE documentation. It is a guide only to help employers and employees know roughly how much costs are. Tax codes can change during a tax year, and tax thresholds change following the annual Budget, thus always agree a Gross wage with an employee.

Oh thank you nannynick, I was hoping you'd see this. I agree, she's not self employed.

So roughly it looks like to pay her £100 a week net I have to pay tax and NI on top of about £175 a month.

Hmm, it's after school club for them I think. Because it works out as

bfast club and aftersch for 2 children = £444 total
bfast club + this woman if I do it properly = £140 bfast + £575 = £715
bfast club + this woman cash = £540

Hmm, £715 just doesn't look low enough to me.

I think they're going into ft after school club.

Would she be keeping her other job?

Would she be prepared to split the tax code between her employers?

Would she be prepared to register as a nanny so you can claim the salary sacrifice vouchers (no use if you are SE)

We do currently have childcare vouchers with dh's job, so £243 of nursery cost is paid from his gross pay.

Hmm, don't know. I tihnk I need to ask her some questions don't I?

yes she would keep other job, it's school hours only.

Breakfast Club and After-School Club may accept the vouchers. If they didn't, then DH could perhaps not have the vouchers anymore, which means that he would be taxed more, but get more take home pay - I think tax/ni saving is about £1000 per year. You would need to work through the figures.

At this stage, explore all possibilities... such as can Bfast/AfterSchool club take vouchers? Can the nanny take vouchers? Does the nanny even want to consider the job?
What other childcare is provided locally, childminder for example - may be more costly than After-School club, but would usually be able to take vouchers.
Work out the pros and cons of each form of childcare, and calculate the associated costs.

Could you put them into afterschool club 2 days a week and use her 3 days a week, or however much you can without triggering the tax/NI threshold?

Good ideas NN and Pru, thank you.
£717 is still a £300 a month saving and we can afford it, I've just been SO looking forward to using the money for something else. This morning is the first time I sat down with my spreadsheet and calculated the options.

You're right NN, bfast club may take the ccard vouchers prob do, and if they don't then dh's net pay will be higher so it'll work out.

I will leave a note for her on Monday asn ask to discuss.

personally i wouldnt pay your nanny cash as it is illegal not to pay her tax and ni as you would be the employer

after reading through the replies- i think prufrocks idea is good,to do both, so they get time at home and also a chance to play with other children at school - plus it will then save you money hopefully

but being a nanny - i would say having care in your own house is the better option IF you dont mind the extra cost

def worth checking out having childcare vouchers (obv your lady would have to get reistered - cost to you £100) but a lot of the cost should then be met

what happens in school holidays? can you take time off work, or do you not work holidays?

School holidays are another pita
atm ds goes to ex mil
dd is at nursery but from Sept we will have to consider childcare for her in school hols

Any possibility of the lovely woman having the children at her house and registering as a childminder?

The dual aspect of both club and lovely woman could be a good compromise for you.

lol at sugar/salt swap.

rebel whispers "trespass" and rushes out again.

Unfortuately Prufrocks idea wont work as she has other employment, being below the threshold only helps if its her only earned income. We have employed someone in the past paying less than the threshold (only three days) but had to deduct tax at 22% because she had another job which used her tax free allowance. She wasnt pleased at losing so much to the IR even though I explained that she would get a tax rebate in April. Did agree a gross wage of course, but was higher than I would have liked because of the above!
Luckily our current after school girl is a student with no other income.
By the way dont forget in your calculations to include holiday pay...and possibly sick pay. Also employees let you down at the last minute sometimes. We still do it because its nicer for the children and with three children there`s very little in it cost wise.

As it's only a few hours after school, would this not count more as "babysitting" than nannying? If you went out in the evening every night for three hours or so, you wouldn't expect to pay tax on your babysitter, would you? My last job required endless attendance at cocktail parties and I just used to bung my nanny a bit extra.

Agree school holidays are a PITA.