Whether you're employing someone for the first time or you have had a nanny in the past, it is essential that you know from the outset what the costs involved are going to be. One of the most important things you can do in order to avoid unexpected costs at a later date is to agree a gross salary with your nanny. This will not only protect your outgoings in terms of your nanny's actual salary, but if you provide her with any benefits in kind, such as the use of a car, you won't be lumbered with the tax bill for that.
Employing a nanny doesn't have to be expensive, and it certainly isn't just for the wealthy. Have you considered sharing a nanny with another family? A nannyshare can be a very cost effective childcare solution and has become especially popular in the current economic climate.
As an employer you need to make sure that your nanny is paid at least the NMW, unless she lives as part of the family household.