Across UK employment, almost all industries will discuss salaries in Gross terms. However for the nanny industry this hasn’t always been the case. If you agree a Net salary you may be in for a shock further down the line when faced with how much employing your nanny is really going to cost. That’s why at Nannytax we advocate the #GOGROSS campaign which highlights the benefits of Gross vs Net, and always recommend that families agree a Gross salary with their nanny.
Gross Salary
Take Home Pay + Employee’s National Insurance + Tax (+ Employee’s Pension Contributions if applicable)
Net Salary
Take Home Pay that the employee receives after Tax, National Insurance deductions (and Pension deductions if applicable).
Top Tip
Imagine GROSS is the larger figure and NET is what the employee catches in their net to take home.
A Gross Salary benefits a Nanny Employer by:
- Enabling them to budget more effectively as it incorporates the additional costs of tax, NI and pension from the offset.
- Protecting them from becoming liable for any of the nanny’s unpaid tax from previous jobs or other deductions which may include court-orders, child maintenance payments and student loans.
- Ensuring the nanny is paying their side of the pension contributions.
- Preventing confusion when liaising with HMRC who will only talk in Gross terms.
A Gross Salary also benefits a Nanny by:
- Giving the nanny job stability as the employer will have a more accurate idea of the costs involved (as a Gross figure accounts for the nanny’s Tax and NI).
- Enabling them to benefit from their tax-free allowance which usually increases each April.
- Giving them the opportunity to benchmark their salary with other professions such as their childcare peers as almost all other industries talk in Gross terms.
- Making it simpler when taking out a mortgage or loan as the lender will want to see proof of income in Gross terms.
Agreeing a Gross Salary protects the employer from becoming liable for any of the nanny’s unpaid tax from previous jobs or other deductions which may include court-orders, child maintenance payments and student loans.
How can I work out what my Nanny's take home pay will be?
Many nannies will still want to know their Net pay so that they have an idea of what they will be taking home each pay day. You’re in luck – our Nannytax calculator will provide all the figures you need including the nanny’s net (take home) amount.
How can I work out what my Nanny's Net Salary would be as a Gross?
Some nannies will quote an employer with their ideal Take Home Pay. That’s where our Net to Gross Calculator comes in handy!
Please note that the figures shown are not a guarantee and will be influenced by your employee’s individual circumstances. If an employer agrees to pay a certain net salary then that’s what should be put in any contract, not a gross version of that.
So how much does employing a nanny really cost?
Unfortunately the Gross salary doesn’t account for all your costs when employing a nanny. What does is something called the Total Cost of Employment.
Total Cost of Employment = Gross Salary + Employer’s National Insurance Contributions (+ Employer’s Pension Contributions if applicable)
In other words, a Gross salary accounts for the Nanny’s NI and Pension Contributions but not the Employer’s.
How can I work out my Total Cost of Employment?
Easy peasy! Our Nannytax Calculator will also tell you your Total Cost. Simply enter the Gross or Net salary figure and it will calculate your Total Cost of Employment and some additional helpful breakdowns.
Other mandatory costs to consider when employing a Nanny:
Employer’s Liability Insurance is a legal requirement for all UK Employers – check out Enable Insurance our Nanny Employers Liability Insurance which includes up to £10 million Employers Liability plus up to £5 million Public Liability Insurance at no additional cost.
Nannytax and Nanny Salaries
Nanny pay can be complicated – which is why it’s a full-time job for us here at Nannytax! If you require further support with Gross vs Net, calculating your total cost of employment or would like to learn more about our Nannytax services please don’t hesitate to give our team a call.
#GoGross Campaign
Calling all nannies, agencies and those working across the UK nanny childcare industry! Join us in supporting the #GoGross Campaign founded by NALO (The Nanny Lounge). #GoGross aims to educate nannies on the problems with Net pay and encourage everyone in the industry to promote Gross salaries. Let’s raise awareness and make an impact.
You might also be interested in
Tax & National Insurance
If you are employed you must pay Tax and National Insurance (NI) on your earnings, however, legally it falls to the employer to ensure these deductions are made.
Tax-Free Childcare
Tallying up your childcare costs and worried about the expense? You’re not alone. Find out how nanny employers can benefit from childcare support schemes such as Tax-Free Childcare.
Rates & Thresholds
The current Government rates for the tax year 2020 – 2021 came into effect on the 6th April 2020. Please see our Rates and Thresholds page for the latest Tax and National Insurance rates.
Enable Limited is an Appointed Representative of Fish Administration Limited and authorised by them to sell liability insurance for nannies and their employers. Fish are authorised and regulated by the Financial Conduct Authority. Firm Reference Number is 310172. Fish Administration Limited is registered in England and Wales. Company Registration Number 4214119. Registered Office: Rossington’s Business Park, West Carr Road, Retford, Nottinghamshire, DN22 7SW.