It’s a nanny employer’s responsibility to report any Benefits in Kind to HMRC each year. It’s not completely straight forward as the tax system doesn’t treat all benefits in the same way. Therefore it’s important to know what you should be declaring in advance.
What is a Benefit in Kind?
Benefits in Kind are perks provided by the employer that are in addition to the nanny’s salary. For example if you pay for your nanny’s Ofsted Registration this is classed as a Benefit in Kind. Each year we ask our clients to report any Benefits in Kind so that we can declare them to HMRC.
How are Benefits in Kind taxed?
Most benefits in kind will incur an additional tax payment, the amount if tax due on your employees benefit in kind will depend on what rate of tax they pay. Tax for most benefits in kind will be recouped through an adjustment to your employees tax code (be aware that if you have a net agreement with your employee that this will impact the total tax you pay). Certain benefits also incur an Class 1a employer NIC payment which is calculated at 13.8% of the value of the benefit.
What needs to be declared?
Accommodation, where the nanny’s accommodation is on the same grounds but they have a separate entrance/utility bills and/or the accommodation is totally separate from your property.
Car (owned by the employer), if you provide a car for the nanny that they will use for personal use (travel to and from work is considered personal use).
Travel (including travel to and from work), where any form of travel for the nanny that isn’t for work purposes.
Ofsted Registration, where an employer is paying for their nanny’s Ofsted Registration
Mobile Phone, where the contract is between the nanny and the supplier and you the employer pay the phone charges.
Loans, where the value exceeds £5000 per year.
Non-working related training
Which Benefits are not included?
Accommodation, if you are providing your nanny with accommodation within your home.
Car (owned by the employer), if you are providing your nanny with a car and the nanny exclusively uses the car to carry out their duties.
Car (own car), if the nanny is using their own car then the family can remunerate up to 45p per mile, above that amount is considered a benefit in kind.
Mobile phones, where the contract is between you the employer and the supplier and the nanny uses the phone.
Taxi rides home from work if the nanny finishes between 10pm-6am and this is outside of their regular working pattern.
Loans below the value of £5000 per year
Welfare counselling (EAP)
Small gifts (below the value of £50)
Travel to and from work if your nanny is disabled
Parking costs if this is used solely for work
Expenses incurred for work purposes
Training where this will support the nanny’s job performance
Nannytax and Benefits in Kind
At Nannytax we offer a fully comprehensive nanny payroll service. Our team will be on hand to support you throughout the employment of your nanny. We can deal with HMRC, run the payslips and you will also have unlimited access to a team of HR advisors – find out more today.
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