Please help me with the sums!

[BubsMaw]

Hi, I've found a great CM who I'd like to use, she's checking her availability and hopefully we'll be able to use her. I have 2DC, one will be at school and needing after school care and holiday care, and one baby needing looked after all day. I also know of a nanny who's highly recommended and will possibly be available when I need the child care (after mat leave ends). OK, I'm capable with a spreadsheet, but I'm unsure of some of the detail of how the pay arrangement works for CMs/nannies, e.g. do I need to pay holiday pay for nanny/CM? What if I can align our holidays? How do I calculate the tax and NI payments for a nanny? Nanny would also require petrol and expenses paid. Presumable the CM hourly rate includes tax and she'll do her own tax returns. I'm not yet sure if I'll work 3x long days or 4 short days, or some other arrangement. The CM wants £5.25 p/h per child, and the nanny wants £10 per hour regardless of no. of kids, plus tax, NI and expenses. With luck I may have a choice. Anyone out there know how it all works? Many thanks

A side issue - I'm thinking the CM may be a better option, because I like the idea of my DC being brought up around other children, to help with socialising - anyone got any views on this? My elder DD went to a nursery and I've been very happy with it, she's confident and socialises brilliantly, sadly the logistics mean DS won't be able to go there.

do I need to pay holiday pay for nanny/CM?

For a Nanny, Yes - Minimum is 5.6 Weeks. For a Childminder it will depend on your contract.

What if I can align our holidays?
Makes sense to do that as much as you can. With a Nanny you still pay. A nanny is an all year round thing usually (Term-Time only nannys do sometimes exist).

How do I calculate the tax and NI payments for a nanny?
HMRC will provide you with a CD-ROM (for use on MS Windows) and online filing systems. You can also use a Payroll Agency (typically around £120-£150 a year) who will produce Payslips, tell you when and how much to pay to Nanny and HMRC.
calculator.kistax.com will give you an indication of what Income Tax, National Insurance and Employers National Insurance would be payable. You enter the Gross Salary per hour (or Net) and number of hours per week. Accept the default tax-code... though note that taxcodes do vary.

Nanny would also require petrol and expenses paid.
Yes. If Nanny is using their own car, mileage is often reimbursed at max amount HMRC permit which is £0.40 per mile (this max amount has not changed in years).
Expenses for outings are also expected. You can of course impose limits... for example, a budget of £5 per day is workable usually during term-time.

Presumable the CM hourly rate includes tax and she'll do her own tax returns.
Yes. There may be additional costs... such as Food, Outings, taking/collecting from school. Some childminders have fully inclusive prices, others charge based on what services are required.

I'm not yet sure if I'll work 3x long days or 4 short days, or some other arrangement. The CM wants £5.25 p/h per child

Sounds about typical for my area (Surrey/Berkshire border). Check what you pay when your children don't attend - such as the child is sick, on holiday. What the fee includes and excludes.

nanny wants £10 per hour regardless of no. of kids, plus tax, NI and expenses.

So they want £10 Net.
With a nanny, especially one not working full-time (5 days per week), always agree a Gross Wage (that is, before Tax and NI deductions) so you are not stung when employee tax rates change.

Consider how many hours of care you will actually need... so factor in the working hours you have plus travel times, then round up a bit so you have some time factored in for running late.

Consider convenience of not having to get children dressed in the morning if you have a nanny, vs having to take your children to a childminder.

There are numerous other factors to take into account when deciding between a childminder and a nanny. Think about what you need now, and also in say 3 years time. Thinking longer term may help you decide as you may want to build a long term relationship with your childcare provider.

CM will be much cheaper in the long run if your dc2 only needs afterschool and holiday hours. I worked out all of these expenses when I worked myself up into a state thinking I was pg with dc2.

For a nanny, you'll have to pay tax, NI...etc and all her holidays (which are generally more than a cm's holidays from what I've seen), nannies will require a "kitty" of money each day so they can go on outings - although you can impose a limit, it all adds up quite a bit... and the nanny will be eating at your house along with the dc, so it will mean a rise in your grocery bill, too.

And, there are so many legal complications with nannies from what I've read on here. Especially if she gets pregnant (or so it seems). Whereas, with a cm, if you want to leave, you just give the notice period required and that's that. I guess you could put that in a nanny contract - that you can terminate the contract at any time with x weeks notice, but not sure about legal implications.
I see it as a nanny is more like hiring an employee to work for you whereas a cm is a service that you carefully select and pay for.

Sorry, that sounds like I'm anti-nanny. . Nannies are lovely and work hard and I have nothing against nannies at all! I just wouldn't want to hire one in my situation and from what I've read on MN it seems like a cm is a more hassle free way to go... oh, that sounds bad, too. You know what I mean!

Thanks for your replies. I had originally planned to use a CM, but after working out the rough cost of that thought a nanny might work out just as (un)affordable. Using the tax calculator link above I've come out with a gross hourly rate for nanny as approx £13.50 ish, so way more expensive than CM who'd charge max £10.50/h for both kids. However with nanny I can appreciate the value in not having to get the DC up or dressed in the mornings, that would buy back time for us, and some morning harmony too!

Both the CM and nanny I had in mind are well into their 50s, both very experienced and good with kids, so I expect they won't be needing mat leave - imminent retirement would be a more likely issue. StarExpat - you're right to think of complications, the CM route seems simpler and all the CMs round here seem to know each other and can help each other out in illness etc. A non legal complication of the nanny we had in mind is that we hear she needs some additional 'people management' - an example being that she managed to get into a fight (verbal only I think!) with one of the mums at preschool, which required a great deal of smoothing over by her employer.

oh goodness, that doesn't sound so good.

I love my cm and so does ds. I'm sure you and dc will all be happy with your decision

the nanny option at £13ish gross an hour every hour is obv more exp then the cm option of £10.50 in holidays/after school and then £5.25 during school hours

let alone petrol/kitty/food etc

yes a nanny makes (or should make) life easier as not having to go and drop/pick up from cm and nanny will dress/breakfast and bath children (if you ask/require)thus giving you more time with your children

think cm is the way to go for your family

As a parent, I think doing those things - bath, dress, feeding - is all "time with my child". It's not playing or reading books, but it's every day stuff that I want to be a part of as his mummy. I wouldn't want someone else doing that for me (but I know I may be very alone in that statement and that's ok!).
I'm a teacher, so I only leave ds at the cm from 7.50am-3.50pm. So that's also very different and I have time at both ends of the day to get that stuff done and spend time playing with ds.
I just enjoy eating meals with him and interacting with him when he plays in the bath...etc.

sorry expact, that was a over generalisation (sp) unfortunally i see many parents who dont want to do what you wrote and it saddens me

im all for working mothers, but when finished work to spend time with their kids, and yet many parents i know (thankfully not my mb) literally get in after kids in bed, or spend 10mins and put them to bed and then at weekends work/send them to activites and NEVER spend time with them - i do wonder why some people have kids

I see.