Tax and Insurance and the total cost of employing a nanny/housekeeper (Tax year 2008/2009)
You should be aware that when you recruit a Nanny you become an employer and must register with the Inland Revenue, immediately. We can refer you to an organisation that will do this for you and provide a payroll service, for an annual fee. To 
see the total cost of employing a nanny please see below.
The National Minimum wage applies to nannies as any other occupation but it does not apply to employees aged under 18 or to nannies living as part of the family household, where there is no separately metered accommodation. NOTE - the net figures apply to a nanny with one job and one wage in a week - Nanny shares and Nanny with two positions have a greater tax and NI liability.
As in most occupations the best nannies command rates higher than the minimum legal wage. The current market rate for an experienced full time nanny is between £7.00 and £9.00 net per hour net. We are able to provide advice and guidance on how to arrange payment for your nanny.
Weekly salaries in this region on average are between £260 - £450 net dependant on duties, experience, hours and age. See table below for a guideline to salary expectations. Candidates typically speak in Net pay terms, but you are advised to write contracts to reflect gross pay.
| Full time Daily Nanny | £250 - £450 net |
| Live in Nanny (plus bills and food) | £250 - £420 net |
| Nanny Daily Rate | £70 - £90 net per day for part week i.e. 3 days |
| Part time nanny | £7.00 - £9.00 net per hour |
| Before and After School care (part time) | £8 to £11 net per hour |
| House Keeper – full time live out | £260 - £400 net based on 8 hour day |
| Part time house keeper | from £9 net per hour |
| Baby sitter * | from £8 total per hour |
| Temporary Nanny * | £10 total per hour gross |
| Maternity Nanny */ ** | from £13.00 total per hour. Multiple rates by arrangement with Maternity Nanny. |
**Note: Maternity Nannies commit to a firm commencement date, in the event of your baby being late, 50% of each week’s salary is chargeable by the Maternity Nanny until commencement.
*Note: The rate suggested for a Maternity Nanny, Babysitter and Temporary staff includes Tax and National Insurance, as these candidates are typically self-employed.
Notes:
- The above figures are based on an employee with a tax code of 522L (the standard personal allowance), and who is only working for one employer. If the employee is keeping another job, the above figures will not apply.
- The figures in the table are approximate as for clarity they are rounded to only show pounds not pence and are provided only as a general guide. PAYE for Nannies Ltd advises clients to check all figures and accepts no liability for any errors or inaccuracy.
Current National Minimum Wage Rates
From 1st October 2008 |
||
For Employees aged 18 to 21 |
- |
£4.77 per hour Gross |
For Employees aged 22 or over |
- |
£5.73 per hour Gross |
Statutory Maternity Pay (SMP)
This is payable by all employers, broadly, if the employee becomes pregnant whilst working for the employer and provided they are paid at least £90 per week. SMP is taxable and is paid at 90% of the normal GROSS wage for the first six weeks of maternity leave and then at a flat rate of £117.18 (or 90% of the normal gross wage, if lower) for a further 33 weeks. In most cases, the employer can reclaim all of the SMP paid from the HM Revenue and Customs (HMRC). A further period of unpaid leave may be taken up to 12 months Maternity Leave in total.
Statutory Sick Pay (SSP)
This is payable as a minimum by all employers if the employee is sick for at least 4 working days in a row. The rules concerning eligibility and payment are very complicated but if SSP is payable, it is paid at a rate of £75.40 per week. The employer may be able to reclaim a proportion of the SSP paid from HMRC, but again the rules are complicated. For lengthy periods of illness (several weeks), the employer is likely to be able to reclaim a higher proportion of SSP paid. If the employer pays more than basic SSP during illness, the basic SSP element may be reclaimed in some circumstances. SSP is payable for up to 28 weeks of illness.
Nannies having more than one employer
The rules regarding taxation of nannies having more than one employer are:-
- The employer who first registers the nanny as an employee will normally be instructed to apply all the nanny’s tax allowances (currently £6035 per year) to that employment.
- Any subsequent employer who registers the nanny as an employee will be told to tax all pay at Basic Rate and will be required to deduct 20% tax from every pound of gross pay.
This is very unfair to a second employer who has agreed to pay the nanny a net wage and results in a very high Income Tax charge. However, for an employer using our payroll service, in most cases we will be able to arrange with HMRC for the nanny’s tax allowances to be shared in proportion to the hours she works in each employment. This will reduce the costs for the second employer, but put up costs for the first employer. The nanny’s pay (if she has agreed a net wage with both employers) will stay exactly the same.
The information above is provided only as a general guide. PAYE for Nannies Ltd advises clients to check all information and accepts no liability for any errors or inaccuracy.
