Employing a nanny
When employing a nanny in the UK you not only have to find the best carer for your children, you also become an employer, and as such you have the same legal responsibilities as a commercial employer. Therefore the law requires you to:
- Have Employers Liability Insurance
- Register as an employer
- Set up and operate a PAYE (Pay As You Earn) scheme on your nanny's behalf
- Keep tax records on her behalf
- Provide your nanny with regular payslips
- Provide her with an employment contract
- Pay regular income tax and National Insurance Contributions
- Pay employer's National Insurance Contributions
- Submit a Full Payment Submission (FPS) to HMRC every time you pay your nanny and an Employer's Payment Submission for months where you do not
These obligations also apply:
- In short-term employment (i.e. a week or longer)
- To any employment taking place in the UK - irrespective of the country of origin of the nanny or employer
Failure to register as an employer if you are paying your nanny above the weekly threshold (see tax rates and thresholds) is an offence, which can potentially lead to heavy penalties and career-damaging publicity.
Consider the following:
Failure to file an FPS every time you pay your nanny can result in late filing and incorrect filing penalties, which could mount to hundreds of pounds.
Failure to pay all tax/NI liabilities in a timely manner results in interest being charged on the amount outstanding.
All these legal obligations can be not only complex but also time-consuming, especially for a first-time employer. Without working knowledge of the tax system and current employment law, you are entering a minefield. Businesses use skilled payroll, legal and human resources professionals, you can too - for a fraction of the price. Nannytax has over 19 years' experience in domestic and nanny payroll and we can transform your hassle into peace of mind.