DIY Tax
Once you have found your nanny (lucky you!) you must inform your local Inland Revenue tax office and they will send you an information pack. The information from the Revenue office will show you how to calculate the tax and NI which is to be deducted from the nanny’s gross pay. Of course, most nannies negotiate their net pay so you may need to ask your tax office to calculate the necessary gross pay for you. You are also required to provide your nanny with weekly/monthly payslips showing clearly that deductions have been made.
You should keep a record of the gross and net pay, tax and NI on a form sent to you by the Revenue. Then at the end of each tax year, you will be sent and be required to complete a form summarising the amounts for the year. It helps if you can send the tax office your nanny’s P45 which her last employer should have given her on leaving.
Just to add to your joys, you may need to pay tax on any perk the nanny has such as a car for her own use outside of work, and petrol. The Revenue will send you a form P11D at the end of each year on which you should itemize these extras. Technically the tax on these items is the nanny’s liability but if you have agreed a net pay with her she will expect you to pay the tax. Find out more from the Inland Revenue’s website at www.hmrc.gov.uk.
N.B. As an agency we believe that parents who are conscientious about paying tax and National Insurance for their nannies are likely to be good employers who will pay properly and will keep their nannies for a long time. We find the same thing with our agency fee. Parents who try to get out of paying that are usually the ones who try to pay their nanny less than they originally stated or try to make her work longer hours than she should. It is all about fair play and consideration for the work and lives of others. Paying your nanny’s contributions ensures that she is helped in sickness and old age which is what she deserves.