If you employ a nanny in the UK and you pay her more than £105 per week (tax year 2008/2009) you have the same responsibilities as a commercial employer and the law requires you to:
- Register as an employer with HMRC
- Keep a payroll record and provide payslips on her behalf
- Pay Employee’s income tax and National Insurance Contributions
- Pay Employer’s National Insurance Contributions
- Provide an annual summary of all these deductions and payments
These obligations also apply:
- If your nanny earns less than £90 per week in your employment but more than £105 in total (e.g. if she has two part-time jobs)
- In short-term employment (i.e. a week or longer)
- To any employment taking place in the UK – irrespective of the country of origin of the nanny or employer
As an employer you are also responsible for paying Statutory Sick Pay (SSP) and Statutory Maternity Pay (SMP) – but the latter may be reclaimed in full from the state.
Remember that National Insurance Contributions go towards your employee’s entitlement to unemployment and state pension benefits. Nannies are increasingly aware of their rights as employees and an employer who takes care of their nanny’s PAYE properly will be considered a good employer in this respect and enjoy the increased confidence of their nanny.
When nannies and nanny agencies agree a salary with the parents they often refer to the net wage – the amount the nanny has in her hand at the end of the week. But in reality the nanny is always paid a gross wage (net wage + tax + NIC), and on top of the gross wage the parents are obliged to pay employer’s NIC. Therefore it is important to be aware of the total cost of employing a nanny.
With few exceptions (maternity nurses and nannies in continuous temporary employment), nannies simply do not meet HMRC criteria for self-employment. If liability to pay tax is not declared to HMRC and it comes to light, it is you, the employer who will be pursued for payment, not your nanny.
Failure to register as an employer if you are paying your nanny above the weekly threshold is an offence, which can potentially lead to heavy penalties and career-damaging publicity.
Consider the following:
- Failure to file employer’s annual returns by 19 May can result in penalties of £100 per month filed late
- Failure to pay all tax/NI liabilities before 19 April results in interest being charged on the amount outstanding
What we do for you:
- Register you as an employer with HMRC
- Keep comprehensive payroll records on your behalf
- Provide your Nanny with payslips
- Process or issue a P45 every time a Nanny joins or leaves you
- Electronically file an employer’s annual return (P35) and employee’s pay and deductions summary (P14) with HMRC at the end of each tax year and provide you with a summary (P60) for your Nanny
- Keep you up to date with tax rates and other changes which may affect your employment responsibilities and implement them on your behalf
- Guide you through any pay-related issues that may arise
- Provide access to our legal advice line manned by a team of advisers specialising in UK employment law
Businesses use skilled payroll, legal and human resources professionals. You can too – at a fraction of the price by contacting County Nannies Payroll (currently £260 including VAT for an annual subscription).
Important note: if you subscribe in the 2008/2009 tax year, you will receive a £75 rebate from HMRC for electronic filing - making the cost to you just £185!
Click here to SUBSCRIBE NOW »
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