The Do’s and Don’ts of Employing a Nanny
When you hire a nanny for the first time, you become an employer. This comes with a set of legal responsibilities, many of which first-time nanny employers are not initially aware of. From registering as an employer with HMRC and running a PAYE scheme to setting up pensions and understanding statutory entitlements, there’s a lot to navigate and a lot to get right.
To help you feel confident as a first-time nanny employer, here is our simple guide to the essential do’s and don’ts of employing a nanny.
✅ Do register as an employer with HMRC
You are legally required to register as an employer with HMRC and set up a nanny PAYE scheme before your nanny’s first pay day. This will enable you to declare tax and National insurance contributions to HMRC each time you pay your nanny.
✅ Do provide your nanny with an employment contract
You must provide your nanny with a contract of employment on or before their first day of work.
✅ Do pay your nanny at least National Minimum wage
As a UK employer, must pay your nanny at least the latest National Minimum Wage rate. You could face serious legal repercussions if you are found to be non-compliant with this
Find out more about paying your nanny National Minimum Wage
✅ Do run proper payroll
You must provide your nanny with a payslip each time you pay your nanny. Payslips must detail their salary, tax & National Insurance deductions, pension contributions, and any other necessary information, such as Student Loan.
You will also be required to submit a Full Payment Submission (FPS) to HMRC, detailing your nanny’s earnings, deductions, and taxes. This needs to be submitted to HMRC on or before your nanny’s payday, even if you pay your HMRC liabilities quarterly instead of monthly.
✅ Do enrol your nanny into a pension scheme
You must assess your nanny’s eligibility for a workplace pension and enrol your nanny into a workplace pension scheme if they are eligible.
Find out more about Workplace Pensions
✅ Do keep records
It’s important to keep clear records throughout your nanny’s employment. You should keep a record of your nanny’s contract, payslips, timesheets, payroll reports and RTI submissions. HMRC can ask to see employer records for up to three years, and having everything recorded means that you can prove your nanny’s pay, tax, and National Insurance were handled correctly.
Thinking about hiring a nanny or already navigating nanny employment?
In the first episode of the All Things Nanny Podcast, we break down the essential do’s and don’ts of employing a nanny. From legal requirements to building trust, we cut through the confusion with real advice, heartfelt stories, and actionable tips for families and professional nannies.
❌ Don’t ignore your HMRC liabilities
Failing to pay your HMRC liabilities can lead to fines, interest charges, and compliance issues with HMRC. Keeping on top of your HMRC payments, or having a payroll provider do it for you, protects you from unnecessary penalties.
Discover Nannytax Plus – we’ll pay your nanny and HMRC on your behalf
❌ Don’t pay with cash without doing payroll
Whilst paying your nanny with cash is not necessarily illegal, it is illegal to not declare the payments to HMRC. Failure to declare your nanny’s earnings to HMRC correctly may result in fines and penalties. Paying your nanny with cash will also mean that the nanny will lose out on their employee rights such as holiday entitlement, sick pay, maternity pay and redundancy as well as not holding a National Insurance record with HMRC which counts towards their state pension.
Why else shouldn’t I pay my nanny cash-in-hand?
❌ Don’t treat your nanny as self-employed (unless they have self-employed status)
Self-employment isn’t the norm in the nanny industry, a nanny may be granted self-employed status from HMRC if they work a series of temporary positions or if they work with three (or more) families.
If you hire a self-employed nanny, you must request written confirmation of the nanny’s self-employment status from HMRC. Failing to confirm a self-employed nanny’s status risks serious repercussions, including liability for all unpaid tax.
Click here to read our ultimate guide to self-employed and employed nannies.
❌ Don’t ignore overtime or extra hours
If your nanny works any additional hours, this should be paid and recorded through payroll.
❌ Don’t change the job terms without discussing and recording the changes
If you want to permanently change any part of your nanny’s job, such as their working hours, duties, work location, or pay, you must discuss it with them first. Once in agreement with your nanny, you should issue a written contract amendment to record the changes made.
❌ Don’t forget to issue a P45 when your nanny leaves
When your nanny leaves your employment, you must provide them with a P45. This ensures the payroll is closed correctly, and your nanny will need their P45 for their next job
How can Nannytax help?
Our award-winning nanny payroll team handles everything from setting up your nanny PAYE scheme, to producing the final P45 when your nanny’s employment ends. When it comes to employing a nanny, we’re here to guide you through every do and don’t, ensuring you stay compliant at every step.
Discover our nanny payroll services
Useful resources for first-time nanny employers:
🔗 Make sure you have everything covered with our nanny employer’s checklist
🔗 Learn what your total cost is with our nanny salary calculator
🔗 Discover everything you need to know about employing a nanny with our Employment Pack
🔗 Find the latest hourly rate for nannies in your area with our Nanny Salary Guide
