Abolish tax on nannies or allow deduction on salaries paid to nannies

[absag]

Please sign this petition if you agree with the logic below:

epetitions.direct.gov.uk/petitions/32739

Parents are required to pay PAYE and NI on employing nannies.

British parents shoulder some of the highest childcare costs in the world.

The average gross salary of a full time live-in nanny in central London is £27,000, which includes £9,500 in tax and national insurance contributions.

Because a nanny?s gross wages are paid out of the parents? after-tax income, this effective double taxation means one parent needs to earn £37,000 a year just to cover the cost of the nanny.

Action government should take:

1). If nannies are treated as employees than parents should be treated as employers and allowed a tax deduction.

2). If not the requirement to pay tax on nannies should be removed

I believe that this will be tax neutral as lower childcare costs will enable more mothers/ fathers to work.

But why shouldn't nannies be liable for tax. They have to pay tax and NI on their salary just like everyone else. The employer's NI might be a different thing, but it certainly isn't double taxation if the nanny pays tax on his or her salary. (in any case, double taxation is fairly normal, what with VAT on purchases made with after tax wages and all that).

And what about the not inconsiderable number of parents who can't afford nannies?

Most employees' salaries come out of pre-taxed money. In our company all our employees are paid pre-tax. If I employed a chauffeur I could pay him pre-tax. but not a nanny. That's the anomaly.

That number would reduce if parents were allowed tax relief on the costs of employing one, of course, damsel.
I completely agree that nannies should be treated as employees, with them and their employers liable to tax and NI on their wages. but these costs should be tax deductible.
Twill never happen, of course, largely because of people who will bleat it's a tax break for the "rich."

Not sure I follow your double tax argument but I do think ,if being fair, you can't ask for a deduction just for nannies as any childcare cost is basically something you pay as a "tax" for working.

Agree with reactionary fish logic

What tax deduction do you think parents should get as the emplover of a nanny?

Is hiring staff tax deductible?

I can see your point for employer's NI, but other than that no.

If nannies are fully tax deductible, then all childcare should be.

And that would cost a lot.

What a load of old rubbish and I've employed a nanny! If you don't want to pay a nanny's tax and NI negotiate a gross wage. Stupid petition.

Now if it was about making childcare tax deducatable or allowing people who are not employees or whose employer does not offer childcare vouchers to buy them that would be worth a look.

It would cost a lot, which is another reason why it won't happen, but that's not to say it's not fair.
to answer your question, if a company or other business hires and pays for staff, it deducts the cost of doing this before it is taxed on its profit. They are not required to pay their staff out of taxed profits.

Oooh Katie, you best hope no-one reports you to HMRC...

I would be more careful than ever now crackdown

Negotiation of a gross wage has nothing to do with your obligation to withhold Paye /nic - you still have to do that and pay employers nic as a nanny is classed as an employee.

Katie, I think there's some cross-purpose talking going on here. This is about making nannies tax deductable - or paying them pre employer's tax which is what happens for other employees.

So yes, Athing, employees generally are "tax deductable" - ie paid their salary before the employer's own tax is calculated.

I know that this topic is very emotive and there would be all sorts of arguments that are in favour of and against this topics .... like nannies are only for rich people, why work so hard that you have to rely on nannies etc etc...

But in my view there is a very simple logic in the argument I am putting forward... let us say if government allows nannies to be treated as employees, treats parents as employers and allows a tax deduction...

It benefits the economy as it makes 2 people employable ... the father / mother who can now work as they can afford childcare.... second the nanny who will now be employed instead of the mom / father who were looking after the kid...

and this will benefit middle class more than rich people who can afford nannies without the tax deduction anyway...

And those who agree with my logic please do not forget to sign the petition and ask your friends to do the same.. I very well know that nothing may come out of it but atleast it may force some debate on the topic...

Why can't nannies be self employed like cleaners, gardeners etc?

Because they are under control of employer as in when/what they do and can't substitute who does it - there are various tests which nanny doesn't pass but cleaner does (basically I am not fussed who comes to clean for me or when but I would be mighty pissed off if nanny sent someone else at different time)

being self-employed wouldn't help much because you would still pay your nanny out of your own taxed income unlike other employees. I guess you'd avoid the employer's NIC but not the double taxation issue.

From Telegraph...

Research suggests more than a third of parents with a net household income above £50,000 admit to struggling to fund childcare costs.
?We have got cases of mums ... saying there is no point in working because of childcare costs,? Justine Roberts, chief executive of Mumsnet, the mother's group, told the newspaper.
?If you live in London and have a nanny, then you do have to earn a pretty big wage. Someone told me that earning £48,000 she has nothing left.?

Are you suggesting nanny employers shouldn't pay employer's NI, or that nannies shouldn't pay income tax and NI?

nannies should pay tax and NI like any other employed person. But not after their employer has already paid their own tax.

In almost every other employment circumstance, you pay your employees before you pay your own tax so you pay tax on the smaller amount (after you've paid out salaries) whereas with nannies you pay your own tax on the larger amount (before you pay out salaries) and then pay their salary.

What about childminders and nursery nurses or are we only talking about tax breaks for nannies?

I think that's the problem crackfox - really all childcare should be tax deductable, not just nannies. It's clearly unaffordable though - I'd imagine the average childcare spend is several thousand pounds per family per year on average.

All we get is rubbish childcare vouchers and I don't even get those (self-employed) [grrr]

I too agree that all childcare should be deductible as it increases economic incentives for parents to work....

NO, no can do.

I believe that this will be tax neutral as lower childcare costs will enable more mothers/ fathers to work why do we need more people looking for work?

Those that are unemployed & claiming JSA are never ever likely to afford a nanny what ever tax incentive you offer.

This is aimed at people who are able to work but can not work because they can not afford childcare.

Re.. why do we need more people looking for work?It is a misnomer that there are no jobs out there ... economies that have a lot of spirit and economic activity do well. look at all the BRIC countries....