As an employer in the UK, If you employ a nanny and you pay them more than £124.52 per week (tax year 2009/2010) you have the same legal responsibilities as a commercial employer and you are required by law to:

• Register as an employer
• Set up and operate a PAYE scheme on your employee’s behalf
• Keep tax records on their behalf
• Provide your employee with regular payslips
• Provide them with an employment contract
• Pay regular income tax and NI contributions
• Pay employer’s NI contributions
• File an employer’s annual tax return

This obligation applies even if you are employing someone for a short period of time, and to all employment taking place in the UK, irrespective of the country of origin of the nanny, or of the employer.

The National Insurance contribution is put towards your nanny’s statutory entitlements such as unemployment benefit, state pension and SMP. Not declaring their salary in full will affect their entitlements and more so it is illegal to do so.

Self-employment is not an option for nannies as they do not meet the HMRC criteria for self-employment. If liability to pay tax is not declared to HMRC, and this comes to light, then it is you, the employer, and not your nanny, who will be pursued for payment.

Payroll Calculator

For idea and information for payroll calculation, call and speak to one of our Consultant or alternatively visit www.nannytax.com

The National Minimum Wage (NMW) & the working time directive

It is a criminal offence to pay below the National Minimum Wage (except if exempted), this can carry a fine of up to £5,000.

National minimum wage – the three rates
There are three different national minimum wage rates, which are usually updated in October each year. The rates that apply from 1 October 2009 are as follows:
• for workers aged 22 years or more: £5.80 per hour
• for workers aged 18 to 21 inclusive: £4.83 per hour
• for workers aged under 18 (but above compulsory school age): £3.57 per hour
Employees who live as part of the family household and are not provided with separate accommodation are excluded from the National Minimum Wage. There is an off-set allowance for employers who provide separate accommodation for their nannies. There is an offset allowance if you provide separate accommodation for your nanny, which will increase to £31.57 per 7-day week (2009) (Please note that the NMW and off-set allowance change every year in October. For the most up-to-date rates, please visit www.hmrc.gov.uk/paye/payroll/day-to-day/nmw.htm.

Domestic employees, including nannies, are exempt from the measures concerning working hours but are entitled to a 20 minute rest break for every six hours worked.

Holiday entitlement: The European working time directive grants all employees the statutory right to a minimum of 5.6 weeks paid holiday a year (pro-rata the number of days worked per week) – 2009/2010.

For further information on tax responsibilities, please visit www.hmrc.gov.uk or contact Spectacular Childcare team on 0845 4633 619, or email us at info@spectacularuk.co.uk.