nanny wages cash in hand

[janett]

why oh why do some employers feel the need to offer x amount pay and then when it comes to signing contracts they want to pay at least a 1/3 cash in hand? dont they realise nannys might one day want a mortgage ect..

Well here in banking you work on probability of being caught (default probability) plus effect of what happens when you are caught (recovery rates) and whether or not you yourself would lose your own job if you got a criminal record (value-at-risk).

And when you calculate all that you turn round and pay your taxes like a good girl

well i pay my nanny's taxes because 1. it's fair to her (she'd struggle getting a mortgage if she was cash in hand 2.i am a scaredycat and convinced i'd get caught
and most pertinently 3. i dont ever want my nanny to have a grudge against me that she might take out on my child (not that i think incidentally she would) or take out by ratting on me to the taxman.
and as for a nanny being a luxury - well yes in the sense that a lot of people can't afford one and i know im lucky we (just about) can, but no in the sense that without one i couldn't work, given my hours.
i dont regard handing over more than half my salary for someone that just enables me to do a stressful job i dont much like, in order to pay the mortgage, as much of a luxury. it's not exactly champagne and oysters, is it?

I am quite new here, so my question might be , how can the inland revenue find out about people paying theur nannies cash in hand as there s no record ??

Well, one thing to worry about is what woodstock mentioned, a nanny who feels vindictive towards you in some way and rats on you. I guess this could happen if you have to dismiss her and she gets p'oed. Secondly, what do you do if your neighbor/whoever offers to do a share with you, you agree, and they start asking questions about tax arrangements/sharing allowances, etc.? Or you give a reference to a new family and the nanny can't produce a P45 for them? Or the nanny is gabbing to people at the school gates and lets it slip? Probably loads of people would do nothing, but some might.

I think it's all ends of the market. And no one seems to believe me, but many people are totally confused about who can be a "childminder" and also think that a "childminder" can work from your home and be self-employed. I don't think it's just people being willfully ignorant.

lol at people here going oooh that fine outweighs the risk!

It really annoys me that some parents still think they can get away with this. In no other job would your boss call you into his office on a Friday and give you an envelop of cash or pay only some of your salary through the bank.
I was recently asked if I would do this in an interview and let rip to the parents. If we continue to let this go on then nannying will still be viewed as glorified babysitting instead of a profession.
You pay your 16 year old babysitter cash in hand for a nights work not your professional nanny who has been in this career for 25 years.

i guess it would be easier for some parents to swallow, if they had to pay the gross wage to the nanny plus their bit of the tax and the nanny would then pay her taxes herself. becacause the way it is, the parents see it as paying themselves instead of paying of behalf of the nanny. still, i find it cheeky, too. i had lots of interviews wasted before i learned i had to make it clear before interview that i am not interested in having an illegal position.
what really annoyed me, i had a call from agency about a cash in hand job to which i replied not interested in illegal jobs. and the lady said, you dont call it illegal, you call it cash in hand.....

The way I see it is that the "credit crunch" wont have any effect of nannies earnings or work availability so long as you are a good reputable nanny with excellent experience and good references. Because at the end of the day families will sacrifice an income (some even lose money) for the sake of their "sanity". As much as every parent loves their child/children not everyone is cut out to stay at home with their children 24/7 - no job (and having children is just like a job really) is designed to be lived in 24/7 for 4ish years. Even after the 4 year mark taking care of your child/children would still be a little like a part time job, then you'd have the housework to do plus probably working part time whilst the little ones are in school etc. That's three jobs - sure some people manage it but I'm sure they'd say they'd opt for help if they could. Even if it meant their salary being swallowed by childcare costs. Sure you'd have no financial gain in working, but in my experience jobs aren't always about the money you get at the end of the month (although it helps!).

In my experience most families with nannies are not high flyers but middle earners who have to make sacrifices elsewhere in their lives in order to afford a nanny. Maybe they holiday less, buy food from discount stores etc. The perception that nannies are a luxury is not something that I could agree with; even though many nanny families struggle to make ends meet I feel that most of them would rather this struggle than struggle even more to fit their lives around childminders / nurseries or drive themselves loopy by being a SAHP.

I for example, have not left my place of work "on time" for about 4 weeks now and have no problem with that - I don't think many nurseries/childminders could say the same thing?

so umm yes - ramble over. I don't think good nannies will be that much affected by the "credit crunch" and neither do I think that having a nanny is a luxury. Oh and while I am at it [soapbox] cash in hand options should not even cross your mind, I'm sure you could recoup the money elsewhere but of course it would be less convenient but it would give you greater peace of mind that's for sure!

NavyeleylasH
I am definitely living in a parallel universe to you. On a double income of six figures it was a strain to pay a nanny full whack with the tax and NI and in fact we couldn't afford to do a full week. Do you consider that to be 'middle income'? In London maybe but elsewhere in the UK, people would laugh at that. I can tell you that in the dot com bubble when freinds and colleagues were being laid off, I didn't know anyone keeping their nannies on, let alone someone who would 'sacrifice' a wage for their 'sanity.' Check on the nanny tax wage calculator and see what that would run you, on £9 net a year. It's not the sort of thing you can fund by cutting back a bit, going to Aldi instead of Waitrose, say, or baking a bit of your own bread. Lol at 'I'm sure you could recoup the money elsewhere.' I think your assumptions about how far a potential empoloysers earnings could stretch are frankly hilarious.

HarrietTheSpy you misunderstood me; I didn't say nannies wouldn't be laid off. I said they wouldn't be out of work. Because there are lots of families out there who could and can afford to pay a good nanny.

That is not to say that there are not perhaps more families who can not afford to pay a nanny. Please read properly and do not infer meaning on my words, I didn't even say every family could afford a nanny. I said that most families with a nanny struggle to find a way to afford it and many spend a whole salary (and then some!) on childcare costs and they are not well off families ergo - for these families, having a nanny is not a luxury. A luxury is not something you have to scrimp and save in order to afford. A luxury is something you could do without and I do not know one family that this would apply to. Every family with a nanny I know needs a nanny for some reason - they do not have a nanny as an accessory or something.

If you personally don't need / can't afford a nanny then fair play to you but to suggest that a nanny is a luxury, something these hard working families are indulging in, well it makes me cross. Especially because a lot of the families I see would rather stay at home and have more time with their children.

It's people who bandy about the term, "nannies are luxuries" that cause the schism between work and non working families. It's the word that justaphase used to describe a nannies role, "luxury". It gets my goat a bit. A nanny is "A foolish or worthless form of self-indulgence" . To me a nanny is someone you can not do without, they allow you mental/financial "relief", they provide you with an opportunity to do/get something for whatever reason you would not be able to do/get in the usual circumstances.

I read somewhere just the other month that a family with 2 children need about £19,240 to live a fairly comfortable life, excluding the cost of childcare & housing. So on that basis, yes I am surprised that someone on a 6 figure salary would struggle to pay a nanny via the proper channels. A full time nanny working 10 hours a day 5 days a week is around £27,700 inc tax and that's worst case scenario. Say you had a nanny share you'd pay around half that, or a few hours after school and full time in holidays is around £13k (this is based on Bristol prices which are pretty close to London to prices)

£20k living costs for family with 2 children + £28k nanny cost = 48k worst case, cheaper if you have children in school or can do a nanny share. Someone with a 6 figure salary earns at least 100k = £52k left over.

And the phrase you used, out of context I might add, "I'm sure you could recoup the money elsewhere" wasn't referring to the complete cost of a nanny (wage and tax) but rather the cost of tax alone which is what, £4,400 odd for a full time nanny, £1500 odd for an after school and holiday time nanny.

If you can't afford a nanny then fair enough, but saying the families who use nannies are indulging in luxury is insulting I feel. To the parents and the nannies IMHO. Obviously I completely understand that not all families can afford nannies!

(not that I think the current tax system is good mind you - just that there is no excuse not to pay your nanny through the appropriate channels. Also I'm not so sure about the 20k mark for a family of 4 - it's all individual really.)

£19k is not realistic - who knows where a number like that comes from or what went into it. Will be interested to see if other parents, with the two kids running a household, comment on this.

The phrase wasn't so terribly out of context anyway, I was referring to the gist of your post.

And I'm not going to comment on your maths or saying anything futher about my household expenses.

Gosh an interesting debate.

Nannies are a luxury and there is no doubt about it. How anyone can say otherwise is madness. The average national salary is less than my nanny earns when you take into account the free accomodation, car , diesel , food , bills and broadband ( I reckon is equiv to about £35k a year gross ). The number of people who will be able to continue to afford them is going to decline and therefore the market place will shrink.

People may like to save their sanity but if the numbers don't add up because nannies have priced themselves out of the market place its a simple equation.

Whilst we pay and declare all taxes etc ( I am a lawyer so wouldnt do anything else ) you can understand why some people may choose not too. Hell builders have benn doing it for years!!

My nanny is totally immune to inflationary pressures as we pay all bills ( she does buy herself food as I refused to buy organic pasta and the like ! )yet still found it necessary to borrow £40 from the kitty at home whilst we were on holiday and says she will pay it back when she gets paid as she has run out of money.............in the real world she would be fired for theft ( how many people take money out of the petty cash at work as they have run out ?? !! )yet she thinks this is acceptable because we are obviously better off than her and we can afford it!

I wont sack her as the children adore her and I cannot be bothered with the hassle...........I think she wont last the course anyway as she is aussie and fed up with the british weather.....but I do think that nannies generally ( not all ) need to wise up. Its tough times out there.

Anyway..........back to running my law firm ( where we have just shed 15% of our staff to save costs ) and baking some bread so I can afford to do without the £40 the nanny ' borrowed ' and pay her this month........

Yep. What the spy said.

Have already seen friends losing their jobs and the nanny getting her own redundancy notice the same day. Good or not, no nanny is immune. And even a good nanny has to wait for jobs to become available when that happens because most employers will keep a mediocre nanny indefinately, rather than go through the upheaval of a switch to a potentially 'better' nanny.

Where I work there is a possibility of 50% staff cuts by the end of the year. And I would guess that if those 2,000 jobs do go, I bet at least 200 nannies will lose their own jobs on the back of it because every single female parent in the company, and a fair good proportion of the men have nannies. This time round there won't be alternative jobs for us to go to so we won't be keeping the nanny on, even for a while whilst we jobhunt. And that is just one firm. There are dozens of city firms like mine waiting to see what happens in next few months. And the omens do not look good (especially when even the headhunters are taking you out for final lunches before they get made redundant...)

Saying all that, I still wouldn't do cash in hand!

oops. thread moved on., will skim and then probably add another out of date comment.

ah. numbers.

100k salary = 60k after tax.

Minus those 20k (hahahaha) living costs = 40k left

Oh, then housing. Let's say a £200k mortgage (very light if you live in London)? That will be another 16k, leaving 24k.

So we then take off the 27k nanny costs and end up with -3k to live on.

Now I would not advocate cash in hand in a million years, but I completely understand why some people feel the urge to do so.

I agree that it is a very interesting debate. I am a lawyer too, and a single mum to a 2 year old. I do think that having a nanny is a luxury, but at the same time for me it's not really a luxury, because I would not be able to do my job without having a nanny. I tried nursery for about three months but it was a complete disaster - I could not get there on time to pick her up, etc. So for me it's a choice between not working (and having no money to live on !) or spending a big chunk of my earnings on a nanny. My main complaint is that the nanny market is a bit strange, with very high earnings compared to other similar jobs, and unless the nanny is Ofsted registered, it is impossible to try to reduce the cost in any way. (And yes, I do pay all the taxes for my nanny !!)

I can not reagard an expense I incur for the sole purpose of going to work as a luxury. Is your train ticket a luxury? What about your work clothes? How about the computer that sits on your desk? (or even the desk)

Totally agree with Squiffy's last sentance: "Now I would not advocate cash in hand in a million years, but I completely understand why some people feel the urge to do so. "

Ha, I did not realise that the use of the word "luxury" will ttriggger a debate. According to the Cambridge dictionarry:

luxury noun
1 [U] great comfort, especially as provided by expensive and beautiful things

2 [C] something expensive which is pleasant to have but is not necessary

3 [S or U] something which gives you a lot of pleasure but which you cannot often do

So, OK, having a nanny is not exactly like buying a diamond ring or going on a posh cruise .... but the point I was trying to make is that it is very, very expensive and one of the first things that people would get rid of if they lost their job. Can you think of any other way to save £2K per month? ... it is a no brainer really.

Thanks Squiffy re the numbers. I was about to return and say that I wasn't talking about a NET salary, those were our gross takings. For a minute I was trying to figure out where my £50K+ disposable income was going after paying the nanny and accounting for my mortgage, etc and what I was doing wrong!!

Re the £28K, a nanny on £9 per hour net would have gotten £39K per year (from recollection) on our 10 hour a day week with tax and NI. £10 per hour works out at £42K. Believe me, had I hired someone like that we would not have a spare £20K a year flying around after tax.

Although I am not saying that someone keeping on a nanny would be asking them to do ten hours...[still trying hard to bring that parallel universe to life.]

im still trying to come to terms with the phrase that my nanny provides me with ' financial relief '.........shall we start a poll of nanny employers who agree with this!!

Hmm I think my words aren't being taken as I intended, my point is that the families I know that have nannies have them because they need them, they have to scrimp and save because they can not really afford them therefore they are not a luxury, as AtheneNoctua pointed out is a train ticket to work a luxury? I feel like some of you are taking my points personally, I am not saying everyone should have a nanny or anyhting along those lines. I am simply saying terming them a luxury is something that I and many of the families I know and work for would find insulting.

I'll try and take each point per person:

HarrietTheSpay my mistake I thought you meant a 6 figure take home salary. I did the maths not to say, "ner ner ner ner ner you can afford a nanny" but rather to point out that yes I did think a couple with a six figure salary would be able to afford a nanny and I illustrated my reasoning by demonstrating the maths behind my thinking.

I also agree about the 19k for a family of 4 and pointed that out in my post. If you want to look at what goes into the figure you can have a look here. Also the "gist" of that end part of my original post is that the tax which some may be keen not to declare could be saved by cutting back on certain items - which is true. If not all of it at least a substantial part.

A nanny on £9 per hour (isn't that loads? I'm not sure as I only know my area but you aren't London are you?) has a gross pay of £32k, assuming they work 10 hours a day 5 days a week.

I don't really get your comment about the 10 hours? I do 10 hours plus when I work full time. I'm contracted 8.30am - 6.30pm and don't get a typical "lunch" break so it's 10 rather than 9 hours. I normally get there about 20 mins early and leave between 10 and (sometimes) 90 mins late (unpaid obviously).

mummypoppins
"a nanny is a luxury no doubt about it" so do you feel families that employ a nanny could do without theirs? I would love to hear you explain this to my current employers!

I work as a live out nanny, I get mileage paid for running the children around which is 40p a mile and to be quite honest I have never asked them for a penny because it's never that far and it's not a big deal to me. Yes there is a good chance the number of people able to afford a nanny/any childcare will decline - but I think the good nannies have nothing to worry about.

Yes I understand why people pay cash in hand - but understanding the reasoning for it does not make it acceptable when the tax part of a nannies pay could be saved up by cutting back other areas. So if you do really want a nanny it's a sacrifice you have to make, unfortunately IMHO.

Your nanny is not the issue here, most nannies live out and do feel the current pinch. I personally would never even dream of "lending" 10p from my boss let alone £40! So that point if neither here nor there.

"im still trying to come to terms with the phrase that my nanny provides me with ' financial relief" sigh If you are a high earner that doesn't need to scrimp and save in order to afford a nanny, does a nanny not provide you with the opportunity to go out and do whatever it is that brings in the cash?

squiffy yes already agreed that nannies are not immune but there will always be a family out there that can afford a nanny and the good nannies will always find a new family IMHO. The situation in your work seems dire but it's not all doom and gloom (but is mostly I agree!) My partner just changed his job (finance sector), got a payrise & the companies is well established with no signs of slowing. It's a bit like the housing market, the high end top houses are not being affected in sale value because someone somewhere will always be able to afford it - that's my theory on nannies; someone somewhere will be able to afford a good nanny. This is all hypothetical and boils down to a difference in opinion which on both sides in based on assumptions and what ifs so that's the last I'll say on the matter.

100k salary after tax is about £65k because of tax free allowance then the tax bands 20/40% (?) so gives you £2k to live on. That is of course the worst case scenario because you have to factor in other (pitiful) tax breaks but more importantly I would have thought a family in this situation would opt for a nanny share / not go back to work until children were in school.

MumOfOne73 "My main complaint is that the nanny market is a bit strange, with very high earnings compared to other similar jobs, and unless the nanny is Ofsted registered, it is impossible to try to reduce the cost in any way. (And yes, I do pay all the taxes for my nanny !!)" Yes childcare does seem to cost a lot, when compared to other similar job (I'm assuming other similar jobs means things you don't need to train for.) It seems that a nannies wage is immune to experience / education from what I've seen and terrible nannies seem to get away with murder. I think it has something to do with parents being desperate and willing to pay what it takes? I personally have a variable rate that the family dictates, maybe I am a bit bonkers?

justaphase
So what you were saying is that a nanny would be the first job to go if the family hit crisis point financially? Yup, I agree. Bit different to saying they are a luxury though, maybe my meaning of the word luxury is squiifed or something? I think excellent nannies will not have any problem with employment but mediocre/new nannies will. Besides it wasn't this part on the debate I had the problem with (as mentioned above this line of thinking is based on assumptions and nothing but opinion. It was the term "luxury". Is a train ticket to work luxury?

Navy
Hi
I'm afraid 9 per hour net isn't loads AT ALL for London. We had lots of applicants who wanted that and more when we've advertised. I ended up hiring someone on 8.50 (oaky, but every bit helps) for three days a week. And then lucked out massively getting someone on 7.50 this last time. (all figures net). Again, we did three days, topping up with nursery/pre school. I've had another look at the calc and we are talking 36K on nine for a ten hour day, five days per week. And sorry, but that or 32K however you got there, is still a huge amount, we are splitting hairs here whether it's that or 39.

And I'm not even going to go into the experience some of them offered, asking for that. I have moaned about it on here before, girls who have had one au pair job for six months and then think they can charge what a qualified nanny charges. The ladies at Simply Childcare explained to me that these girls can get 8-10 cleaning and so why would they work for less, even if arguably they should be offering a discount to a more suitably qualified nanny and a full time gross wage on those numbers works out at more than a qualified teacher/numerous other jobs etc. i guess the question is how many of these people FIND work in the end, although I do know a Brazilian girl who was getting 10 in So Ken, could barely understand me when I was introdcued to her, and had only five months experience. No childcare experience at home in Brazil either. And visa (student) about to expire.

When I told a lovely ozzie girl there was no way we could do 10 net, she said: fine I'll take cash in hand. We didn't hire her, not for that reason alone, I'm just saying what I've experienced as an employer. She was not remotely the only person we've met over the last two recruiting bouts who said this.

I'm in a state of panic now as with two kids (one who needs colelcting from school) my gig of topping up with a nursery/pre school is not going to work anymore (probably). So, I'm spending loads of time on my maternity leave worrying about it.