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Nannytax tax facts

Historically most nannies have been employed on a full-time basis, however in these unsettled times part-time employment is much more common and nannies may have to consider working for two or even more families to make up a full working week.

With this changing trend comes the inevitable question of who gets the personal tax-free allowance. As an employer you need to be aware that only one family can take advantage of the nanny’s full tax-free allowance (see current rates and thresholds for this year’s tax allowance), and whilst it’s common practice for the employer where nanny works the most hours to get the benefit of this allowance, it does belong to the nanny, and so she is free to decide what to do with it. It is also possible to split the tax code proportionately between two or more employers (see nannysharing made easy), providing nanny gives consent.

You must also bear in mind that although you may only employ your nanny one day per week and pay her below the current threshold, you must consider her total weekly earnings as it is this amount that determines whether tax and NI has to be deducted or not. It is your responsibility to establish the nanny’s weekly work pattern, because if you don't you could face hefty penalties. Feigning innocence or turning a blind eye are not worthy excuses in the eyes of HMRC.

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