I have always done ours myself, but I would use a service if it fulfilled the following criteria:
Cost no more than £100pa
Run totally on-line/email - I don't want payslips through the post, I want them emailed to me and the nanny. And when it's time to pay the NI, don't send me a paying in slip (do they still do this?) just let me know how to set up the online payment.
All I want is to have a (secure) web site that I can log in to, update any details that need doing, say how much I want to pay (net, gross, different amounts each month/week, christmas bonus, whatever), and email confirmation sent to me automatically telling me what I have done. That way there is no lost correspondence, no misunderstood telephone conversations.
A web site with some really good FAQs on, perhaps a support forum too.
... and not too much else really.
Is there such a service?