Employing a Nanny - Frequently Asked Questions

What do I have to do when I become an employer?

You have to register as an employer and set up a PAYE scheme on behalf of your nanny.

Why can't my nanny do this herself?

Because it is your responsibility as her employer.

But can't she be self-employed?

No. Nannies do not meet HMRC criteria for self-employment.

What if I don't register and just keep quiet about it?

It is a criminal offence not to declare employment - carrying a large fine or prison sentence on conviction.

What benefit is there in operating PAYE for my nanny?

The National Insurance Contributions you make on her behalf count towards her state pension as well as other state benefits. Your nanny is more likely to stay with you if she is treated properly as an employee. This is part of that process.

How do I pay my nanny's tax and NI?

As a small employer you will pay it every three months using a slip from your scheme payment booklet provided by HMRC.

What do I have to do as an employer with a PAYE scheme?

• Keep full tax records
• Supply your nanny with regular payslips showing tax and NI deductions made on her behalf
• Process and file various forms including P45's, P60's and an Employer's Annual return
• Operate Statutory Sick Pay and Maternity Pay if these apply to your nanny at any time

Is there any risk involved if I do the paperwork myself?

If you miscalculate and underpay your tax liability, you will be charged interest on the balance. If you file your Annual return after the annual deadline (May 19th) you will face an automatic penalty of £100 for every month filed late.

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