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Tinies Payroll
Our Payroll Service
Tinies Payroll Calculator
Agreeing Gross Wage
National Minimum Wage
Our Payroll Service
If you have any further questions on this, or anything else, please don't hesitate to contact Tinies Payroll on 0845 226 2209 or email us at payroll@tinies.com.
Alternatively: click here to subscribe now to Tinies Payroll.
If you employ a nanny in the UK and you pay them more than £105 per week (tax year 2008/2009) you have the same legal responsibilities as a commercial employer and the law requires you to:
- Register as an employer
- Set up and operate a PAYE scheme on your employee's behalf
- Keep tax records on their behalf
- Provide your employee with regular payslips
- Provide them with an employment contract
- Pay regular income tax and NI contributions
- Pay employer's NI contributions
- File an employer's annual tax return
This obligation applies even for short periods of employment, and to all employment taking place in the UK, irrespective of the country of origin of the nanny, or of the employer!
National Insurance contributions go towards your nanny's statutory entitlements such as unemployment benefit, state pension and SMP. Not declaring their salary in full is not only illegal but also affects these and other rights.
Self-employment is not an option for nannies as they do not meet the HMRC criteria for self-employment. If liability to pay tax is not declared to HMRC, and this comes to light, then it is you, the employer, and not your nanny, who will be pursued for payment.
Becoming an employer, especially for the first time, can be both stressful and confusing and without working knowledge of the tax system and current employment law you are entering a minefield. Businesses use skilled payroll, legal and human resources professionals. Now you can too - at a fraction of the price. Tinies Payroll, as brought to you by Nannytax has an outstanding reputation for customer service.
You also have unlimited access to our comprehensive legal advice helpline. Clear and readily accessible legal advice is a key element in keeping employment on the right track and preventing a breakdown in communication.
We file all clients' end-of-year returns electronically, which means that as long as you pay tax and NI contributions on behalf of your nanny you automatically qualify for a £75 tax-free rebate from Revenue. It's as simple as that.
Our low-cost fixed-fee service offers outstanding value for money. There are no extra costs - and no meter running - when you use Tinies Payroll.
Use the Tinies Payroll Calculator to help you work out the difference between "net" and the actual "total" cost to you as an employee. Follow this link to use: Tinies Payroll Calculator.
Always agree a gross wage with your nanny
In the nanny industry net-wage agreements are surprisingly common. But a net wage agreement can have serious financial implications for both the employer and the employee. By agreeing a net salary the employer is essentially writing a blank cheque - committing to pay ALL tax and NI contributions on behalf of their nanny, irrespective of any changes in the legislation and without taking into account her individual tax code or tax position.
The solution is to agree the salary on a gross wage basis. This protects the employer's total costs and means they will not be affected by changes in the legislation, nor will they run the risk of getting lumbered with any unpaid tax from their nanny's previous employment.
Many first-time domestic employers don’t realise that they must pay tax and NI on top of a net salary, and when the true employment cost becomes apparent it may become clear to them that it's too expensive and they may decide to only declare a portion of the nanny's salary.
But by only declaring part of the salary the employer is not only committing a criminal offence, the nanny's future pension and benefits entitlements will also be affected.
The National Minimum Wage (NMW) & the working time directive
It is a criminal offence to pay below the NMW (except for exemptions - see below), carrying a fine of up to £5,000.
The current NMW rates are as follows:
- £3.40 per hour gross for employees aged between 16 and 17
- £4.60 per hour gross for employees aged between 18 and 21
- £5.52 per hour gross for employees aged 22 years and over
Employees who live as part of the family household and are not provided with separate accommodation are excluded from the NMW. There is an off-set allowance for employers who provide separate accommodation for their nannies. The current off-set allowance is £30.10 per 7-day week. Please note that the NMW and off-set allowance change every year in October. For the most up-to-date rates, please visit www.nannytax.co.uk/rates.html.
Domestic employees, including nannies, are exempt from the measures concerning working hours but are entitled to a 20 minute rest break for every six hours worked.
Holiday entitlement: The European working time directive grants all employees the statutory right to a minimum of 4.8 weeks paid holiday a year (pro-rata the number of days worked per week), which includes 4 bank holidays. This will change from April 2009 to include all 8 bank holidays.
If you have any further questions on this or anything else, please don't hesitate to contact Tinies Payroll on 0845 226 2209, or email us at payroll@tinies.com.
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