What not to do - the drawbacks of tax code splits

It is possible in some instances for two employers to pay two agreed net wages to their nanny and split a tax code between both employments.

Nannytax does not recommend tax code splits, as there are several drawbacks to this solution. Splitting tax codes requires the consent of the nanny, information from both employers and the co-operation of HMRC, which is not always easily obtained. It typically takes three months or longer to arrange, once the HMRC has first set up a PAYE scheme for each employer, which itself can take some time, by which time employment arrangements may well have changed in one or both jobs.

Tax code splits are often not allowed to be applied retrospectively. Some tax offices may also automatically cancel a previously agreed split at the start of each new tax year, which means that it has to be applied for all over again, with consequent further delay. A tax code split may also result in an underpayment, which can lead to a hefty tax bill at a later date.

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