Nanny pay- how do I calculate a gross wage/salary for hmrc?

[fruitcorner]

I agreed a net daily figure with my nanny. I am now trying to work through the employer CDrom and prepare pay slips and deduct PAYE/NIC etc. however these all require a gross figure for the nanny's wage. How can I calculate this accurately?
I have looked at the tax calculator on the nannytax site but it's not precise enough.
Thanks

That's one reason for agreeing a gross wage with your nanny - it is difficult, and the system is set up to work the other way round. If you have a contract with your nanny for a net wage, and it turns out that she owes the taxman for unpaid tax from previous years, then I think you could be liable to pay that for her.

Have you given her a contract yet? If not I'd be inclined to work out roughly what the gross wage would be (and perhaps round it up a bit), explain the calculations to your nanny and get her to agree the gross wage - it will make your life a lot easier going forward.

Otherwise I think you will need to pay NannyTax to manage your pay, and they will sort all of that out for you..

Yes, I agree that I have done it the wrong way round but too late now! I understand that lots of people (even on MN) agree net wages so somebody on here must have way to work out the gross figure - unless everyone uses nannytax or equivalent?

sure nick will be able to work it out for you

the nannytax calculater is a rough guide

I aske nannypaye.

You should contact HMRC on 08457 143 143 and discuss the situation with them. You need to tell them that you have entered into an agreement with your employee that all their earnings are to be paid free of tax and NICs. See: HMRC: Free Of Tax

You can use the calculator at www.listentotaxman.com but it isn't sufficiently accurate for doing the monthly payroll run. It should however give you a closer figure.
The trouble is that you may be needing to take into account tax and NI your employee has paid to date so far in this current tax year. The online calculators won't take those amounts into account... thus why they can't be used for payroll purposes.

Assuming you are not wanting to pay a payroll company to do the calculations (they will use something like Sage Payroll Professional, which does NET to GROSS calculations), I think you need to use the ListenToTaxman calculator to get as close as possible to the right Gross figure... then re-agree the contract with the nanny, such that it you are agreeing to pay X amount Gross per year (or per month).

ListenToTaxman does not do Net to Gross calculations. So you need to GUESS the Gross amount and then alter it so that you get the NET figure as close as possible to your desired result.

For example, for £350 NET per week, £1979.74 gross per month works out about right. If you feed that figure into your Employers CD-ROM, see if it works out close enough for your particular employee. Obviously, you will need to adjust the figures used for the calculation to suit the amount you are paying your employee.

For 09/10 Tax year... if using the same figure, the NET wage is different - see here.

You shouldn't use this calculator for doing Payroll forms really, but it can be pretty close (if not spot on), so When Needs Must!

Your employee may have various circumstances which makes differences to their NET pay throughout the year... changes in tax code for example. As soon as you are able renegotiate the contract, such that you agree to pay a GROSS wage... it's so much easier.

the nannypaye website has a table which breaks down the total cost into gross plus emplyers NI - which may be more useful. I have always paid nannypaye to work it all out

Thank you all for your help - the links are v.useful.
Agree that once I have done all this I will renegotiate the contract to pay a Gross wage....

Ive just spent hours on the phone to HMRC trying to find out the same. They use the calculation of Net Wage divided by 80% = Gross wage that you should enter on the CDROM. The good news is that the new CD Rom for 09/10 has a Grossing-Up (as it is called!) function on it that will do the calculation for you - Good Luck!