Payroll
THE SERVICE WE OFFER
A specialist payroll service takes over all the necessary admin entailed in you becoming an employer for the first time. If you do not have a working knowledge of the tax system, the responsibilities and legal obligations involved can be both time-consuming and complex.
Fortunately inexpensive, friendly, professional help is at hand. We recommend Nannytax, who offer a complete support service to parents and will not only take care of all your payroll responsibilities for you but will also guide you through any legal issues that may arise.
LEGAL RESPONSIBILITIES
If you employ a nanny in the UK 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 your nanny with payslips
- Pay Employee's income tax and National Insurance Contributions
- Pay Employer's National Insurance Contributions
- Provide your nanny with an annual summary of all these deductions and payments
These obligations also apply:
To 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.
NET OR GROSS WAGE
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. We strongly advise you to agree a salary based upon a gross wage. When you agree to pay a gross wage with your nanny your total costs are protected, and you will not normally be affected by any changes in legislation, nor will you run the risk of getting lumbered with any unpaid tax from her previous employment.
SELF-EMPLOYMENT
With few exceptions (maternity nurses and nannies in continuous temporary employment), nannies 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 and have to pay penalties, not your nanny.
PENALTIES
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.
What Nannytax will 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 a Full Payment Submission (FPS) with HMRC each time you pay your nanny, as well as an Employer's Payment Submission (EPS) for any months that you don't pay any employees. They will also provide you with a year-end 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 their legal advice line manned by a team of advisers specialising in UK employment law
