Can I be self-employed?"Can I sort out my own tax and National Insurance?" this is a question we're frequently asked by nannies. Whether someone is employed or self-employed depends on the terms and conditions of their work. It is important for all employees to know their employment status as it affects employment and benefit rights, and how to pay tax and National Insurance Contributions.
It is equally important that the employer is absolutely certain whether their nanny is employed or self-employed.
How to determine employment status
A worker is probably considered employed if they:
- have to do the work themselves
- can be told at any time what to do, where to carry out the work or when and how to do it
- work a set amount of hours
- can be moved from task to task
- are paid by the hour, week or month
- can be paid overtime or receive bonus payments
- can hire someone else to do their work or engage helpers at their own expense
- risk their own money
- provide the main items of equipment needed to do their job, not just the small tools that many employees provide for themselves
- agree to do a job for a fixed price regardless of how long the job may take
- can decide what work to do, how and when to do the work and where to provide the services
- regularly work for a number of people
- have to correct unsatisfactory work in their own time and at their own expense
The exception to the rule
It's clear to see that in most cases nannies do not meet HMRC's criteria for self-employment. The childcarers that do are maternity nurses and childminders.
However in some cases HMRC do grant nannies self-employment status. It's important to remember, though, that transfer of self-employment status between jobs is not automatic, and each situation will need to be considered individually.
So in the vast majority of cases a nanny will be employed and it is up to the parents, her employer, to register with HMRC, operate a PAYE scheme and pay tax and National Insurance Contributions on her behalf. Failure to declare an employee to avoid paying tax and NI is a criminal offence which can result in heavy penalties. It also affects a nanny's right to statutory entitlements such as unemployment benefit, statutory maternity pay and state pension.