Why Nannytax is invaluable for families with nannies and housekeepers

Friday, 27.04.2018 at 04:35PM

Are you a professional family weighing up the advantages and disadvantages of hiring a nanny for your household? If so, you might be a little puzzled by the prospect of having to officially employ your chosen qualified nanny. As nannies are considered legitimate employees, families are required to meet the same professional employment standards as any other business with staff.

This means you’ll have to clearly specify expected working hours, offer paid annual leave, sick pay, redundancy pay and a workplace pension.

Unsurprisingly, the primary confusion for families looking to employ a nanny surrounds wage arrangements. Nannying is one of the few remaining professions where salaries still tend to be agreed in net terms. However, this can be misleading to families as net pay does not take into consideration tax and employer national insurance contributions.

Why gross wage arrangements are better than net wages

Most employers now tend to offer salaries in gross pay figures. For instance, if you earn a £40,000 wage, your tax and National Insurance contributions (NICs) will be deducted from this figure. In this example, if you have a £40,000 salary, your take home pay will be £2,530.60 – once you’ve deducted £483.33 for income tax and £319.40 for NICs. The £2,530.60 figure is your net wage or ‘take-home’ pay.

Traditionally, professional nannies have quoted their services in net. However, there have been instances where this has caught out families in the past who’ve forgotten to add income tax and the nanny’s NICs on top – money that may not have been budgeted for.

Total pay and employers’ national insurance

It’s also important for families to take into consideration their own obligations as new-found employers. This includes National Insurance. Employers don’t just pay for their nanny’s gross salary. As an employer, they must pay employers’ National Insurance. This equates to an additional £4,338.17 on top of a gross salary of £40,000 per year.

Introducing Nannytax: An easy way to calculate tax liabilities

We cannot overemphasise the importance of accurately calculating your tax and National Insurance obligations as an employer of a qualified nanny or housekeeper. That’s why we recommend all our clients use Nannytax for guidance and support on salaries and workplace pension queries.

On the Nannytax homepage, you’ll find a calculator that’s been updated for the 2018-19 financial year. This allows you to work out salaries based on net and gross pay, as well as the correct employee and employer pension contributions.

Nannytax also offer families a dedicated payroll service, removing the hassle of registering as an employer with HMRC and all of the associated administration burden. Nannytax pay the nannies, HM Revenue and Customs and issue formal payslips, P60s and other official documentation. All of which is accessible to you via their Members Area.

Their services include bespoke employment contracts for your nanny, written by their specialist HR advisors.

Having a nanny should help ease your burdens, not add to them. Nannytax can save you time and hassle, allowing you to get on with life and do what you do best. If you’d like a formal introduction to Nannytax and a chance to discuss your specific concerns, contact Nannies Incorporated today and we’ll introduce you to a friendly and experienced Nannytax account manager.