Nanny Cost, PAYE Tax and Contract of Employment

Little Masters and Misses office team are not qualified to give final costs to employ a Nanny or in-depth salary, PAYE tax or contract advice.

Nanny salary rates start from £8 up to £16 per hour gross and generally:

  • Those who have never worked as a Nanny earn from £8 up to £11 per hour gross.

  • An experienced Nanny of one year or more start to earn from £9 per hour gross.

  • Above £13 per hour gross, LMM believe is the fairest paid those who have worked 5 - 20 years as a Nanny with great references a Parent can check.​

 

The minimum wage in 2021 for a Childcarer:

 

  • 18 - 20-year-olds, start from £6.56 per hour gross which is fair for a mother help role.

  • 21 or over start from £8.36 per hour gross.

  • 23 and over start from £8.91 per hour gross.​

With 36 years of Nanny industry knowledge, we do know both the Employee (Nanny) and Employer (Parent) must be realistic and fair in their per hour gross and net rate to be paid or to pay expectation. 

  1. Salary is based on the Nannies level of childcare qualification, past childcare sector work in and for how many years.

  2. Annoyingly ​90% of Nannes in interviews tend to just speak of a `take-home` rate they seek which causes confusion. So Little Masters and Misses discuss and agree on a fair approximate Minimum Net Per Hour that a Childcarer working as a Nanny will consider that is stated in their CV Report. We provide a Gross Per Hour conversion table and we insist to only talk in terms of gross and net.

  3. If an Employer to get a more experienced Nanny offers a lower gross or net per hour rate as stated in their CV Report a Childcarer in need of income may accept but not tell the Employer continues to go to other family interviews until gain the minimum rate they will consider as stated in their CV Report.

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Tax and Contract

A Nanny Employer by HMRC is deemed the Employer and must register the Nanny their employee using their Personal Tax Allowance code with HMRC to set up a PAYE 20% income tax deduction scheme and Employee National Insurance (NI) ​from their full agreed salary then pay to HMRC.

 

For most Parents calculating (based on the number of contract hours per week) to a monthly and annual gross cost that keeps within their maximum per hour gross rate can be complex.

 

Before interviewing Nannies for advice contact HM Revenue and Customs (HMRC) www.gov.uk/paye-for-employers/paye-and-payroll.

 

Or contact a Nanny PAYE Tax Payroll Company who can assist with calculations and then for around £25 per month can help an Employer HMRC register, do on their behalf the Employee PAYE payroll and provide a Contract of Employment which reassures a Nanny.

 

As with any other career, there are varied employer statutory requirements to follow.

  • Check before starting the Employee is eligible to work in the UK.

  • Give the Employee a written Contract of Employment and monthly payslip.

  • Pay to HMRC a separate Employer National Insurance (ENI) contribution.

  • Do a Work Place Pension scheme for their Employee, a contribution is paid by both the Nanny (5%) and Employer (3%)

  • Pay for Employer Liability insurance.

  • Petrol and car wear allowance - paid if a Nanny is asked to use their own car to transport a child to a nursery, school, club or outing.

  • Give a minimum Statutory Holiday Entitlement that is dependant on how many days and hours they work per week

  • Pay Statutory Sick Pay (SSP) of about £100 per week if the Nanny is off sick for at least four days in a row and provides a doctor’s certificate. The first, 3 days are 100% unpaid (self - certification) and the Employer is under no legal obligation to pay. The nanny can ask to be paid by using available annual leave.

  • Statutory Maternity Leave (SMP) - Employer pays the Nanny for up to 52 weeks but claims back from HMRC. The Nanny has the right to return to work but only on the previously signed contract terms. The Nanny can ask if the Employer will consider a new contract that allows Nanny to bring their own baby to work. An employer is under no legal obligation to agree to and if does it is only fair to discuss a reduced per hour gross rate as the Nanny is then not giving sole care to the Employer's child or paying any childcare cost so they can work and also be with their child all day too.

 

Other points:

 

  • The Employer to provide lunch, snacks and a weekly kitty for craft items, Child treats or local low-cost outings.

  • Neither can suggest nor be asked to be self-employed whether employed full, part-time or temporary or in a NannyShare or with own Child. 

  • We are aware of circumstances where an employer may not need to HMRC PAYE register for example if an Employee (Nanny) is paid less than £113 per week

  • If an Employer does not declare all gross earnings not only is it illegal for both to agree to then the Nanny is actually being gross underpaid and later unable to tell their full gross earnings affecting a future mortgage or loan or say to a new Nanny employer.

  • If a Nanny has a 2nd job (employer) both Employers share the tax allowance and still need to deduct PAYE Tax​.

  • HMRC can also advise a Nanny Employer based on their specific circumstance of any eligibility for help with childcare costs such as universal credit30 hours of free or tax-free childcare and their own employer may offer a salary sacrifice scheme to help with childcare costs.