Nanny Tax, PAYE and Pensions

Nanny Tax and PAYE

We actively recommend parents and employers to discuss all aspects of the vacancy including; finances, job duties, holiday entitlement and special circumstances with the family prior to commencement of employment. Having all business matters agreed upon helps ensure a successful working relationship. Whether you employ a Live In Nanny or Live Out Nanny, a Governess or Nanny/Housekeeper and Nanny/PA these rules apply to you.

Yes it is the law. All employers are required to instigate PAYE arangements for their employees. As an employer you are duty bound to deduct the Tax and National Insurance that is owed to the state by your employee. In the UK you are required to pay it to Her Majesty’s Revenue and Customs (HMRC) on the behalf of your employee. As a Nanny employer, you are no different to any company. and must collect the Tax and NI from the nanny each time she is paid and pay it over to HMRC.

Almost all nannies aged between 22 years old and the State Pension Age who earn above the UK Tax Free Allowance (currently £11,000) will need to be enrolled automatically. A nanny who may not qualify for automatic enrolment into a pension scheme does still have the right to ask to join a workplace pension, which as the employer you will be required to provide in the UK.

Where can I find out more information in the UK?

The HMRC website provides up to date information and examples about various situations that dicate when you must pay your nanny under the PAYE system. The following examples are taken directly from The HMRC Website.

  • If you pay them less than £112 gross per week and they don't have another job elsewhere - or other taxable income such as a pension - nothing is due to HMRC and you don't have to do anything.
  • If you pay them between £112 and £156 gross per week and this is their only job and they don't get other taxable income, there are no tax or National Insurance contributions due, but you should still register with HMRC so your employee will be entitled to state benefits and pensions.
  • If you pay £156 gross per week or more you must register and pay Employer's National Insurance as well as deduct Employee's National Insurance from the salary and pay it to HMRC.
  • If you pay £204 gross per week or more you must now also deduct tax from your nanny's salary and pay it to HMRC.

USEFUL LINKS:- The Pensions Regulator - | NEST Pensions - | State Pension Age Calculator - | WAYE2PAYE Payroll - | NANNY TAX Payroll -