| Net | Gross | Net | Gross |
| £100 | £101 | £320 | £422 |
| £120 | £126 | £340 | £452 |
| £140 | £154 | £360 | £482 |
| £160 | £184 | £380 | £512 |
| £180 | £214 | £400 | £542 |
| £200 | £243 | £420 | £572 |
| £220 | £273 | £440 | £602 |
| £240 | £303 | £460 | £631 |
| £260 | £333 | £480 | £659 |
| £280 | £363 | £500 | £685 |
| £300 | £393 | £520 | £711 |
Average Salaries
Each year, Nanny Tax complies a survey of average nanny wages around the country that is published in Nursery World magazine’s Professional Nanny Supplement.
| Area | Live-in Nanny | Live-out Nanny |
| London | £19,956 | £26,937 |
| Outer London and home countries | £18,007 | £22,514 |
| Other cities and towns | £15,760 | £19,335 |
| Rural areas | £15,689 | £18,939 |
National Minimum Wage
Nannies are entitled to receive the national minimum wage if they live out or are provided with separate accommodation. Since October 2004, workers aged 22 or over can expect at least £5.35 an hour; the rate for workers aged between 18 and 21 is £4.45 an hour. You should always agree a gross (pre-tax) and net wage with your nanny.
Deciding a Salary
When deciding how much to pay your nanny you will need to take into consideration your nanny's age, qualifications, experience, the number of children you expect them to look after and the hours you require them to work.
- Daily Nannies Most families employing a live-out nanny require their nanny to live close-by; therefore you will need to consider the cost of living in the area in which you live in.
- Live-in Nannies Most Live-in Nannies receive some ‘benefit in kind’ as part of their wage. For example, private accommodation or use of a car. There is guidance governing payments of benefits in kind, and employers should be aware of any special tax provision they need to make.
The Inland Revenue provides information for Employers. They can provide you with a starter pack for new employers; download it from here or for more information regarding employment look at www.inlandrevenue.gov.uk. For information on the rights of workers in this country and your responsibilities as an employer visit Department of Trade & Industry.
Tax & National Insurance
Legal Responsibilities
If you employ a nanny in the UK and you pay her more than £100 per week (tax year 2007/2008) 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 £87 per week in your employment but more than £100 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 and Maternity Pay - 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.
Net or Gross Wage
When nannies and nanny agencies agree a salary with the parents they often talk about 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 there is a considerable difference between the net wage and the true cost of employing a nanny. Parents are advised to find out the true cost before agreeing on a net wage.
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.
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
Self-employment
With few exceptions (maternity nurses and nannies in continuous temporary employment), nannies simply do not meet HMRC criteria for self-employment.
Remember 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.
National Minimum Wage (NMW)
- £3.30 per hour (gross) for employees aged between 16 and 17
- £4.45 per hour (gross) for employees aged 18-21
- £5.35 per hour (gross) for employees aged 22 and over
Nannies who live as part of the family household are exempt from NMW
How to get started
Becoming an employer for the first time can be a source of great concern. 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. Nannytax is the UK's original and leading payroll service for employers of nannies and other domestic staff. Nannytax offers 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.
Businesses use skilled payroll, legal and human resources professionals. You can too - at a fraction of the price by contacting Nannytax (currently £260 including VAT for an annual subscription). Alternatively you can do it yourself by contacting your local tax office. Or you can use an accountant to run your PAYE scheme for you - but this will certainly cost a lot more.
(Information provided by Nanny Tax 2007)
The Childcare Approval Scheme
The Childcare Approval Scheme was introduced in April 2005. It enable parents to get some financial support to help pay for their childcare employment costs.
There are two types of financial support available:
- employer-supported childcare vouchers
- working tax credits
Families whose combined family income exceeds £59,000 can use employer-supported childcare vouchers, which will exempt parents from paying tax and NI on the first £55 per week they spend on childcare. Families with a combined family income below £59,000 can also use childcare vouchers but will also be eligible for working tax credit support for childcare in their own home. Parents on the lowest incomes will receive the most with support tapering off towards the higher end of the scale. The financial support will cover 80% of childcare costs of up to £175 per week for parents with one child to £300 for families with two or more children.
Bluebell Nannies register Nannies who meet the requirements specified in the Approval Scheme. However, not all Nannies would have undergone the administrative process of being approved. The Cost of this process is £99 and this includes the Enhanced Criminal Records Check and the administrative involved in processing the application. If the employer requires an approved childcarer in order to use childcare vouchers or claim working tax credit and the Nanny they are employing is not approved it is customary practice for the employer to pay for the prospective nanny to be approved.
The Approval only lasts 12 months. A further £99 will need to be paid in order to be re-approved at the end of the year.
If your nanny is not already registered with a childcare voucher company a welcome pack will be sent to you with a registration form for nanny to fill in. Under the new childcare approval scheme your nanny is required to provide the voucher company with a copy of her approvals certificate (which will be issued by the approvals body once she has been approved) when she registers. If paper vouchers have already been issued these need to be included when nanny sends in the registration form.
Once the voucher company has received the registration form they will issue your nanny with a unique service provider number. If electronic vouchers are used you need to authorize the transfer of the value of the vouchers from their virtual account into one that has been set up for your nanny. Once the childcare voucher provider has received confirmation of transfer they will issue payment to the value of the vouchers.
Nanny has the option of being paid either by BACS or by cheque. It will take approximately three days for the BACS payment to clear into her bank account. Nanny tax payroll company found that one of the main concerns raised by nannies is whether childcare vouchers will mean that her salary will be late. Initially there will be a slight delay, but once the account is up and running, it should operate smoothly, and not cause any further delays. As her employer you may wish to consider moving nanny’s payday to offset any possible delays.
Nannytax clients have expressed concern about the potential hassle involved with paying nanny partly in childcare vouchers, so they have put together a step-by-step guide to help clarify the issue. Childcare vouchers are just a different way of paying your nanny. Her salary will not change when you start using vouchers, nor will the amount of tax and NI you pay on her behalf. However, you will be able to save money on your own tax and NI payments, in some cases as much as £2,000 per family per year. Childcare vouchers can only be used to pay for childcare.
See Nannytax for more information on the payroll service they provide.
