Paying a nanny and tax credits

[anastaisia]

quick question - if I employ an OFSTED registered nanny and I'm claiming help with child care costs through tax credits; do I tell them the nanny's gross pay?

Sorry if that should be obvious.

I just told Revenue and customs lot exactly what I was paying my nanny and they worked it out. So, yes, that would be gross.

thought it would be, but then started wondering and couldn't find anything on it when I searched for reassurance. Just trying to figure out if I can afford to do this.

Thanks

I think it may be mentioned in WTC5. Will post link when i'm home (currently in mobile mode).
Think you also include Employers NICs.

Yes, it is mentioned in WTC5
You can claim up to 80% of the gross costs of employing someone. It includes the cost of employers National Insurance Contributions and any other costs associated with employing someone.

thanks, thats brilliant.

Didn't think I'd be able to include the employer's NIC so that's a bonus. Do other costs include employers liability insurance? Or will I need to cover that completely myself do you know?

Don't know alas... they don't say what 'other costs' they consider they include and don't include.

Employers Liability Insurance is usually part of your household insurance policy and isn't usually extra cost. Check your home insurance policy.

I am interested to see how you work things out... to see if the tax credits system will really enable parents to use a nanny, rather than childminder/nursery.

I think you have one child... is that right? Therefore if you qualify for 80% of childcare costs, the maximum weekly amount paid is £140.

If you were having a full-time nanny, working 10 hours per day, 5 days per week, earning £100 gross per day then weekly cost before Employers NICS is £500.
Yearly cost therefore £26,000 plus Employers NICs of about £2650, giving total you have to find from your take home pay of lets say £29,000.
Tax credits if you get 80% would be £140 x 52 = £7280, giving you £21,720 to pay.
If your pay was £29,000 per year, your take home pay would be £21,817 (assuming usual tax code), which only barely covers nannies salary.
Clearly those are probably not the figures for your case, but in the above situation, I can't see tax credits paying £7280 given the income level.

Don't suppose you would share details of your calculations, so that I and others can see how this does actually get calculated.