Nannies and Working Tax Credit and general advice, please

[Haily111]

Dear Mumsnetters,

I am currently going for a full time job at my council. My dd is in nursery 5 half days at the moment (i work afternoons). I got chatting to one of the nursery nurses on one occasion and it turned out that she was interested in becoming my dd's nanny, if i got this job, she is also willing to do the Ofsted Voluntary registration. my job will start off paying around 17000 a year gross. my dd will be in nursery from 8 - 13 and then i would like the new nanny to pick her up from then until around 5.30/6 pm. She is finishing her level three in early years in January. My queries are what would be the average hourly rate i should pay her seeing as the wage i am on. Also i receive WTC and CTC currently and would like to know if my theory makes any financial sense. Also can you work out a nanny's NI and Tax out by yourself or do you have to go to a special agency?

I hope this all makes sense and please let me know if you need anymore information.

Thanks

Are you using the vouchers element to pay for your DDs nursery currently? I'm not sure how it works spreading the benefits between 2 types of care but I'm sure someone will. Theoretically you can use vouchers and WTC for OFSTED registered care, including nannies. Bear in mind that she may expect you to meet the cost of registration (about £100) and she will need her core skills qualification, a 12 hour paediatric first aid and nanny insurance.

It is possible to do a nanny's tax and NI yourself and HMRC have guidance for small employers. You will also need to pay employers NI for your nanny which will add to the cost of a nanny.

I would check the agreement with your nursery carefully though, because they may have rules about nursery nurses subsequently working for families they know through the nursery. I know of one nursery nurse who has a clause in her contract saying she can't work for any family within a year of her or the child leaving the nursery but yours may be different.

Forgot to answer your question about wages.

That depends one your location and the nanny's experience - it will be more in the South East that in Yorkshire for example but anywhere between £5-7 net per hour so the gross cost to you is approximately £7.50-9.50* per hour.

*very rough guestimate - try using a calculator like listentotaxman.com for a more accurate figure.

How is nursery funded - are you paying for that, or is it free? What percentage award have you got for Childcare element of WTC?

With one child, if you had an 80% award, then max weekly amount is £140 (see WTC5).

I calculate that the nanny would be working 1300 hours per year, which if you managed to get them to agree to £6 per hour gross (which is above minimum wage, so could be above what they get at nursery), their salary would be £7800 gross per year. Employers NI on that is roughly £941 (source: E-Gismos UK PAYE calculator) so your childcare cost for WTC purposes is £8471. Max claim amount is £7280, so that will result in you having to find £1461. This does not include any expenses the nanny may have, travel costs, the extra heating/light at your home, extra food etc. It is purely calculation based on salary alone.
I don't know how WTC works, in terms of how long it wakes them to sort out payments to you, but I would imagine that there may be delays on occasion, so you need to take account of paying your nanny from your own salary, then you live on the remainder of your salary plus the amount from Tax Credits when it turns up.

Not sure if that is of help or not. Without knowing a great deal about your finances, can't advise if it makes financial sense to do this or not... my gut feeling is that care for just one child can be obtained at a lower cost in many areas - for example, childminders in my area charge £4.50-£5 per hour.

I would suggest researching how much it would cost for your DD to attend nursery full-time (8-6), and also other forms of childcare such as registered childminders.