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Understanding Nanny Shares

'Ask the Nannytax Expert'

nanny shares

 

Nannysharing can be a great childcare option for some families but there are certain misconceptions surrounding how the arrangement works. Senior Payroller Trupti Patel is here to answer your questions on this much-talked about topic in our latest Ask the Nannytax Expert Q&A.

Trupticircle

What is a nanny share?

Trupti says: Most commonly, a nanny share is when a nanny works for two families at the same time, caring for the children from both families together. The nanny share may also be an arrangement where the families split the week between them so that the nanny works set days for one family and then set days for the other. It isn't necessary that the families know eachother, though good communication between the two is likely to make it easier.

 

What are the key benefits of a nanny share?

Trupti says: Nanny sharing can work great for those in need of part time childcare, it can also keep childcare costs down which allows more families the opportunity to hire a top quailty, experienced nanny. Another advantage is that it gives children someone to play with which is great for developing their relationship-building skills.

 

Can the nanny's salary be split between the two families?

Trupti says: No - this is a common misconception with nanny shares, although it lowers the cost for both families in most cases, HMRC considers the arrangement as two separate employments so the nanny's pay is treated as two separate incomes and each family needs to be contracted as an employer so the pay can be reported accurately. This means a separate contract for each employer and a separate payroll scheme for each employer.

 

Do both employers have to pay National Minimum Wage?

Trupti says: Yes, each employer has to fulfil the nanny's rights as their employee and both must comply with legislations such as National Minimum Wage.

 

How does this work with tax, NI and pension contributions?

Trupti says: Due to being considered as two separate employers, both must declare the correct tax to HMRC. The same applies for National Insurance and Auto Enrolment if the nanny qualifies for a pension scheme. Nannytax will be able to cover all of this for you with our payroll services.

 

What if the nanny's other employment is self-employed?
 
Trupti says: HMRC will be unable to predict the earnings concerning the self-employment half of the nanny share and therefore a tax code split cannot be operated in this circumstance.
 
 

Does the nanny get paid more for looking after more children?

Trupti says: Typically yes, although every case is different, some families have seen nanny sharing as a great way to give their nanny a pay rise by sharing the cost with another family. However, remember both employers must still pay at least minimum wage.

 

How many children can the nanny look after in a nanny share arrangement?

Trupti says: There is no legal limit but a nanny can look after two families children at once. The number of children should be decided by how many the nanny feels she can look after which is likely to depend on the ages of the children, their needs and the nanny's experience. Shares with two or three children are the most common.

 

Which family will be expected to host the nanny share?

Trupti says: Usually both families' houses will be used for the share but they can agree something different dependent on circumstances. For example, if one family has a parent working from home they may prefer that the other house is used for the share. In any case this should all be drafted into the contracts of employment.

 

Who covers the expenses for the equipment such as highchairs and car seats?

Trupti says: It depends on the circumstances - if it's a case where a family is joining the share, they should cover the cost of extra highchairs, cots or whatever else their children require. Alternatively the costs can be split equally. The families are also expected to provide things like nappies and wipes as well as contributing towards food.

 

We deal with nanny shares daily and have a dedicated and experienced nanny share team who can navigate the complexities of splitting costs and making sure each family pays the correct liabilities to HMRC. If you are looking to start a nanny share you can speak to one of our team who will help you get started.