Employers Information

Types of Nannies

There can be a few different types of nannies

Nanny Shares

Due to the increase in a nannies pay over recent years many parents are finding it more cost effective to 'share' a nanny with another family. Essentially all this means is that your nanny has another job running concurrently with her employment with you. Normally this creates little or no concern to an employer however in the nanny industry things can be a little different.

Problems usually arise when nannies agree a net salary with each employer without either the nanny or employer considering fully the tax implications of the nanny having a second job. In the UK an individual has a personal tax code (522L in tax year 2007-2008). This code means that they receive just over £5220 tax free each year via PAYE. After the tax free allowance we have a 10% band then 22% and finally 40%.

If a person has a second job however, the Income Tax in that second job starts at the 22% band leaving out the tax free allowance and 10% banding. For a second employer paying a net salary (i.e parent picks up the tax bill) this will mean one family pays a disproportionately higher tax bill than the other.

The Nanny Share Options

Tax Code Splitting 'our specialty'

If both families involved in the Nanny Share are using the NannyPaye service we are able to consult with the Inland Revenue and accurately split your nannies tax free allowance between employers proportionately. This can be a time consuming process however we have found it achievable and more importantly a very popular option for parents.

 

Paying Gross

By agreeing a gross wage with your nanny and not a net wage the tax bill your nanny has is paid for by her and not you. This lets you limit your total cost of employing your nanny to the gross wage + Employers NI. In a Nanny Share situation it means an employer can effectively forget about unpredictable implications of second jobs.

Live in Nannies

Live in nannies are a great way of have almost 100% flexible childcare in your home. Their are tax implications if your nanny has a separate front door and gas metering as this maybe considered a benefit in kind. In practice most nannies are given a room in the household which mean no additional tax and also interestingly means an exception from the National Minimum Wage.

Live out Nannies

Live out nannies live away from the family home and are probably the most popular choice for parents at the moment. This style of nanny arrives at work each morning and leaves every night thus working to a pre arranged set of hours. We must advise parents that NannyPaye has found a disproportionately higher rate of absence due to sickness from live out nannies in comparison to live in. Perhaps its easier to 'pull a sickie' if you live out? We can only guess.

Temporary Nannies

A temporary nanny is exactly that, she temporarily works for you as your employee. As such you will need to register her as your employee with NannyPaye and make sure taxes are deducted from any wages. It is very rare (not impossible) for a nanny to be self-employed so we advise parents to check with the local tax office before employing any self employed nanny that she is as she says.