Paying your Nanny
Nanny Payroll and PAYE
All employers are required to operate a PAYE Scheme for their employee/s, deduct the Tax and National Insurance each employee owes to the state and pay it over to Her Majesty’s Revenue and Customs (HMRC) on the employee’s behalf. Nanny employers are no different and must collect the Tax and NI from the nanny each time she is paid and pay it over to HMRC.
According to the HMRC website these are the situations that dicate when you must pay your nanny under PAYE:
If you pay them less than £112 gross per week and they don't have another job elsewhere - or other taxable income such as a pension - nothing is due to HMRC and you don't have to do anything.
If you pay them between £112 and £156 gross per week and this is their only job and they don't get other taxable income, there are no tax or National Insurance contributions due, but you should still register with HMRC so your employee will be entitled to state benefits and pensions.
If you pay £156 gross per week or more you must register and pay Employer's National Insurance as well as deduct Employee's National Insurance from the salary and pay it to HMRC.
If you pay £204 gross per week or more you must now also deduct tax from your nanny's salary and pay it to HMRC.
If they have another job or other taxable income
If your nanny has another job - or other taxable income, such as a pension - you'll need to operate PAYE no matter what they earn. This is because their tax-free allowances will normally be set against the pay from their main job or pension, which means tax may be due on their earnings from you.
Employers are also responsible for administering Statutory Sick Pay and Statutory Maternity Pay if required, ensuring that they are reporting payroll activities to HMRC via Real Time Information, and from as early 2015 Auto Enrolment will come into force for nanny employers.
This may seems like a lot to take on, but one way of ensuring that everything is done and done properly is to subscribe to a nanny payroll service such as Nannytax. Nannytax has been providing comprehensive and complete payroll administration, providing peace of mind for thousands of nanny employers across the UK for over 20 years.
What does Nannytax do?
• Register you with HMRC and operate a PAYE Scheme on your behalf
• Calculate Tax, NI and any other deductions and provide payslips for when nanny is paid either weekly or monthly
• Calculate what you need to pay to HMRC every quarter
• Report to HMRC every time you pay your nanny
• Process P60s, P45s, P11Ds and other tax related documents
• Administer Statutory Maternity/Sick Pay and Benefits in Kind, as a when required
Nannytax also provides
• The Nannytax Contract of Employment
• Employment Law Support for a team of specialists at Nannytax Legal
• An online Members Area for you to access and manage your account at Nannytax
• Unlimited support and advice on a range of payroll and nanny employment issues
• Additional services such as insurance for employers and nannies
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