2 December 2004

The pre-budget report and nanny employment

The Chancellor delivered some news that are of interest to nanny employers. The following will come into effect at the start of the new tax year, unless otherwise stated.

  • The personal tax-free allowance for employers under the age of 65 has been increased by £150 to £4895 per annum. This means that the first £4895 earned every year is tax-free.

  • The National Insurance threshold has been increased from £91 to £94 per week, which means that NICs are only payable on salaries above this amount.

  • The income tax threshold has been increased from £91 to £94 per week.

  • As of April 2004 the Lower Earnings Level (LEL) has been increased from £79 to £82 per week. This is the amount a nanny (or any other employee) has to earn in order to qualify for statutory benefits.

  • Statutory Sick Pay has been increased from £66.15 to £68.20 gross per week.


  • The lower rate Statutory Maternity Pay has been increased from £102.80 gross per week to £106.

  • Statutory Paternity Pay and Statutory Adoption Pay have been increased from £102.80 gross per week to £106.

  • Employer-supported childcare vouchers - if you use a registered nanny you will be able to claim both tax and NI relief on the first £50 you spend on childcare per week

  • Tax Credits - Under the Childcare Approval Scheme families with a combined family income below £59,000 will be eligible for working tax credit support for childcare in their own home.

    • Back to news index