nanny / staff tax
The following information has been supplied to us by Nannytax for the benefit of our clients.
general tax information:
- if you employ a Nanny or Domestic Staff in the UK and you pay them more than £125 per week (tax year 2010/2011) the law requires you to:
- register as an Employer with the Inland Revenue
- keep a payroll record and provide payslips on the Staff’s behalf
- pay Employee’s income tax and National Insurance Contributions
- pay Employer’s National Insurance Contributions
- provide an annual summary of all these deductions and payments
these obligations also apply:
- if the Staff earns less than £97 per week in your employment but more than £110 in total (e.g. has two part-time jobs)
- in short-term employment (i.e. a week or longer)
- to any employment taking place in the UK – irrespective of the country of origin of the Staff or Employer
- as an Employer you are also responsible for paying Statutory Sick Pay/Maternity Pay – but the latter may be reclaimed in full from the state.
- remember that National Insurance Contributions go towards your Employee’s entitlement to unemployment and state pension benefits. Employees are increasingly aware of their rights, and an Employer who takes care of their Staff’s PAYE properly will be considered a good Employer in this respect and enjoy the increased confidence of their Staff
net or gross wage
- wages are usually agreed by Agencies on a net basis i.e. the amount the Staff have in their hands at the end of the week. In reality Staff are paid a gross wage (i.e. a net wage + tax + NIC). On top of the gross wage the Employer is obliged to pay employer’s NIC. There is a considerable difference between the net wage and the true cost of employing Staff and Employers are advised to find out the true cost before agreeing on a net wage.
penalties
- failure to register as an Employer if you are paying your Staff above the weekly threshold is an offence, which can potentially lead to heavy penalties and career-damaging publicity.
- failure to file Employer’s annual returns by 19 May can result in penalties of £100 per month filed late.
- failure to pay all tax/NI liabilities before 19 April results in interest being charged on the amount outstanding.
self-employment
- with a few exceptions such as Maternity Nurses, Nannies and Domestic Staff in continuous temporary employment, Nannies and Domestic Staff do not meet the Inland Revenue criteria for self-employment. Remember if liability to pay tax is not declared to the Inland Revenue and it comes to light, it is you, the Employer who will be pursued for payment, not your Staff.
national minimum wage (NMW)
The current NMW is:
- £3.57 per hour (gross) for employees aged between 16 and 17
(as of October 1st, 2009)
£4.83 per hour (gross) for employees aged 18-21 (as of October 1st, 2009)
£5.80 per hour (gross) for employees aged 22 and over (as of October 1st, 2009) - staff that live as part of the family household are exempt from NMW.
how to get started
- becoming an Employer for the first time can be a source of great concern. If you do not have a working knowledge of the tax system the responsibilities and legal obligations involved can be both time-consuming and complex. Fortunately inexpensive, friendly, professional help is at hand.
- nannytax is the UK’s original and leading payroll service for Employers of Nannies and other Domestic Staff. They offer a complete support service to Employers and will take care of all your payroll responsibilities and also guide you through any legal issues that may arise.
- the annual subscription for NannyTax is currently £260 including VAT. Alternatively you can do it yourself by contacting your local tax office or use an accountant, but this is likely to cost a lot more.
Further information is available upon request from the Agency, or visit:
Nannytax also provides detailed information about
Ofsted Registration and Childcare Vouchers:
www.nannytax.co.uk
or telephone: 0845 226 2203 and mailbox@nannytax.co.uk