Nanny Payroll and Nanny Employment FAQs
Navigating the ins and outs of hiring and paying a nanny can feel overwhelming, but we’re here to help make the process as smooth as possible. Whether you’re new to employing a nanny or just looking to brush up on the latest regulations, our FAQs cover everything from payroll setup to pension contributions. Let us guide you through the essentials so you can focus on what matters most—providing a happy and secure environment for your family and your nanny.
If your query is not answered, contact Nannytax on 0203 137 4401 between 8.30am – 7.30pm, Monday to Friday and 10am to 4pm on Saturday and Sunday or email mailbox@nannytax.co.uk
Pre Employment Advice
What is a nanny paye scheme?
A nanny PAYE (Pay As You Earn) scheme is a payroll system used in the UK to manage the employment of a nanny. When a family hires a nanny, they become the nanny’s employer and must fulfil certain legal obligations, including managing their taxes and National Insurance contributions.
What is a nanny share?
A nanny share is an arrangement where two or more families employ the same nanny. This could mean the nanny cares for all children at the same time, or splits the week between each family. The families don’t necessarily have to know each other but having good communication will make the arrangement much easier.
How do I find a nanny?
Hiring a nanny is a more personal employment relationship than the norm. That’s what makes it that extra bit important to find the right person for the job.
- Nanny Agencies Suits those who have limited time and a larger budget. Recruitment specialists will talk through your family’s requirements, interests, and parenting style to match you with the most suitable nannies on their books.
- Online Recruitment: Suits those who have a limited budget and more time to manage the recruitment process. Online recruitment sites have a proximity search to find nannies near you.
- Doing it yourself: Suits those who have a small budget for ‘finder’s fees’ and/or have more time and wish to fully control the recruitment process. If you choose this method, we strongly advise you do thorough research to ensure you understand the legalities of becoming an employer.
How do I calculate my nanny’s salary?
Calculating your nanny’s salary involves several steps to ensure compliance. Here’s an example of what you need to calculate.
- The gross salary you will pay your nanny. The gross salary is the total amount before any deductions for taxes and National Insurance.
- Both the employee’s and employer’s National Insurance contributions
- The employee’s Income Tax.
- Employers and employee’s pension contributions, where applicable.
- Any student loan contributions.
How do I calculate the total cost of employing a nanny?
Aside from your nanny’s gross salary, you’re also responsible for Employer’s National Insurance contribution, Employer’s pension contributions and Employer’s liability insurance.
How much does a nanny cost?
One of the key factors that determines a nanny’s rate of pay is location. For example, nannies based in London can generally command higher salaries than those outside of the capital.
There are other factors to take into account when agreeing on a salary with your nanny such as education, qualifications, and training, years of experience, additional duties and number of children cared for.
Employment Advice
Do I need to give my nanny a contract?
All UK employees, including nannies, must receive a contract of employment (or at the very least a statement of employment terms). The nanny must receive their contract by their first day of employment to allow them time to read over the document and raise any queries that they may have.
The Nannytax Payroll and HR service includes a free bespoke contract, as standard.
Do I need to provide my nanny with a payslip?
Yes, by law, you must provide your nanny with a detailed payslip each time they are paid. The payslip should include gross pay, deductions (such as tax and National Insurance), and the net pay received.
Can I pay my nanny cash in hand?
While you can pay your nanny in cash, you still need to process their payroll through PAYE, report the earnings to HMRC, and make necessary deductions for tax and National Insurance. Cash-in-hand payments without proper deductions are illegal.
What happens if my nanny is sick?
If your nanny is off work due to illness, they may be entitled to Statutory Sick Pay (SSP) if they meet certain criteria, including earning at least £123 per week (as of 2024). SSP is paid by the employer, and the rules and rates are set by the government.
What are my responsibilities regarding pension contributions for my nanny?
Providing a workplace pension is a legal requirement for all employers including nanny employers. There are many tasks that employers need to conduct to comply with the legislation.
For example, if your nanny earns above a certain threshold (£10,000 per year as of 2024), you must enrol them in a workplace pension scheme and make contributions. This is part of the UK’s auto-enrolment pension laws.
How do I make my nanny redundant?
Nannies, providing they meet the requirements, are entitled to redundancy pay like any other employee. Therefore, it is important to know about the legalities of redundancy. Redundancy can be a tricky subject and difficult to negotiate. That’s why at Nannytax our payroll and HR team can provide our customers with end-to-end support with this process.
In order to qualify for redundancy the nanny must:
- Have at least two years of continuous employment with the same family
- Be working as an employee with a PAYE Scheme and under an Employment Contract*
*This does not necessarily mean a written contract, as some employers unfortunately don’t provide this. A nanny is still considered an employee working under a contract even if there is nothing in writing.
Prefer to talk to someone?
We understand you might prefer to talk to someone about your query. That’s why our team is available to talk on the phone from 8.30am – 7.30pm, Monday to Friday and 10.00am to 4.30pm on Saturday and Sunday or email mailbox@nannytax.co.uk.
You might also be interested in
Holiday Pay
All employees are entitled to paid time off work – more commonly referred to as holiday allowance or holiday pay.
Sick Pay
All employees have the right to time off work if they’re unwell. If your nanny calls in sick for the fourth day in a row, you are responsible for applying the Statutory Sick Pay they’re entitled to.
Maternity Pay
If your nanny falls pregnant, there are certain legal procedures that you need to follow when it comes to the maternity leave.