Aarrggh! Trying to work out nanny tax/Ofsted/ tax credits situation and is giving me a headache. Please help!

[bean612]

Dear expert MNetters,

I'm in the process of employing a nanny (shortly to be nannyshare) and really need the financial help I've discovered we can get from child tax credits and (I think) childcare vouchers from DH's work. However, I see that the nanny needs to be Ofsted registered for these. Who is meant to pay for the cost of registering, first-aid certificate, public liability insurance, etc? And I'm worried about the "proving to have the necessary childcare skills" bit - what does this actually mean? Our nanny comes highly recommended, has loads of experience and my daughter seems to love her, but she has no paper qualifications. So will she suddenly have to take courses - and who will pay for those? The whole thing is giving me a headache (never mind trying to work out the whole tax situation) and any advice would be hugely appreciated!

The nanny should ideally be paying for all costs of registration. However as it does not currently seem to benefit the nanny that much, some employers are paying the Annual Fee (currently £103).

The nanny needs to meet the requirements of the scheme... this means having some kind of formal training, recognised by Ofsted. There are short courses (such as CACHE unit 1 of ICP - MNTtraining) that can be done by those without childcare qualifications but availability may be quite limited depending on your location - plus it will take time... so instead of being registered in say 2 months... the course will need to be done first, then the registration process started... so I'd say you are looking at 3 months+ realistically.

I have written some information for nannies here with regard to what CR1.4 CR1.6 mean - well at least my understanding of what they mean.

Are you sure you will qualify for Tax Credits? Try not to confuse those with Childcare Vouchers. Childcare Element of Tax Credits is means tested, whereas I don't think Childcare Vouchers are.

Thanks nannynick. We are eligible for tax credits, I've checked (using the HMRC online questionnaire).

We can't wait 3+ months for the registration process to be complete before she starts, though. So could she work unregistered while the registration process is underway and she completes the course, then once she's registered we could apply for tax credits and vouchers from then on? Or would that not work??

Note that if you get childcare vouchers the amount of tax credit you get may be reduced. See here for information and examples.

As Nick says your nanny will need some paper qualifications: there are some providers that offer home study (including the one he linked) which might be the best option.

There is no problem with applying for tax credits once she is registered. You can start getting childcare vouchers now and save them up for when she is registered.

I think it depends on the voucher provider, though I suspect most will enable you to 'bank' vouchers for future use (though they do have an expiry date, typically a year from date of issue).

Tax Credits is another matter though, as they will need the providers registration details before they will process your claim. As MrAnchovy says - the childcare vouchers are part of Income so may affect any Tax Credits claim, or entitlement to other benefits. As you are able to claim Working Tax Credit you may be able to get other benefits www.entitledto.co.uk is quite a good benefits calculator.

I am afraid it's more complicated than that Nick, the important point is not that childcare vouchers are part of income it is that they are viewed as reducing the amount you pay for childcare which directly affects the childcare element of the claim for Tax Credit.

The link I gave explains all, including examples and two simple questions that tell you when you are better off not getting vouchers.

These things are always far more complex than they first appear.

Seems strange that it is seen as reducing the amount paid for childcare with regard to tax credits, when as a nanny it is considered part of my income and is thus liable for employee tax, employee NI and Employers NI. Doesn't seem fair - but then these things never are.

I think the best advice is that if someone is entitled to both Childcare element of WTC and can also get Childcare Vouchers, then they need to look very carefully at which is better to apply for given their circumstances.

Seems strange that it is seen as reducing the amount paid for childcare

Sorry to be pedantic but that's not what I said .

It is seen as reducing the amount you pay for childcare (because some of the total amount paid for childcare is paid in vouchers provided by the employer).

not an expert on child tax credits but do know about ofsted - we registered our nanny and paid for it (£100 a year ish) as we felt the benefit was to us and not to her. took a while to register so started paying her without them and then when the registration came through, got the vouchers.
what was annoying was that although she had an up to date CRB check, they asked for another CRB check for the specific purpose of the registration (and charged for it, obviously ). she had a basic first aid qualification but we paid for a refresher extended course as well to be certain of meeting registration requirements.
she didnt have formal NNEB quals either but when i rang ofsted to inquire what was necessary they were INCREDIBLY vague and said they hadnt decided yet! (this was two years ago). she had done a child development course with the OU and they accepted this instead. they may have more set regulations now but frankly the whole thing seemed rather woolly.
are you getting a nanny payroll agency to help with tax etc if it is a nannyshare? they usually have advice lines that can help with tax related queries. if one of the families is paying her using vouchers and/or tax credits it may make the situation more complex.