Legal & Tax Responsibilities
Once you employ a nanny, you effectively become his/her employer. As a result you do have legal responsibilities which are featured below:
Payroll, PAYE & National Insurance Contributions
At Buttons, we recommend families look into the use of the services of a nanny payroll agency, to help assist you with all payroll requirements. There are many nanny payroll agencies on the market, however we do recommend the services of Nannytax. For more information visit their website:
It is not mandatory to sign up to a payroll agency as you may wish to use a family accountant or take care of the payroll yourself. If so, you are legally obliged to register yourself as an employer and set up and operate a PAYE scheme on behalf of your nanny. You are required to provide your nanny with payslips that indicate PAYE and NI contributions made on their behalf.
As the employer you will be required to pay employers National Insurance (NI) which contributes towards the employees nanny’s Statutory Sick Pay, Statutory Maternity Pay, unemployment and state pension benefits. At the end of each year, you are legally obliged to file an Employers Annual Tax Return to Inland Revenue.
You will be responsible for paying statutory maternity pay during your Nanny’s maternity leave period, you can however reclaim this from the Government. This can take time so it would be sensible to contact HMRC for advice on setting up the SMP arrangement and how to calculate what your Nanny is to be paid, based on your particular employment circumstances.
In most cases, and as long as your Nanny was not already pregnant when she started working for your family, she will entitled to 52 weeks maternity leave and you are required to keep her job open until she either returns or notifies you that she will not be returning to work. If your Nanny has been employed by you for at least 26 weeks before the notification week, which is 15 weeks before the baby’s due date, then she is entitled to claim statutory maternity pay. Your Nanny will be entitled to claim the first 6 weeks at 90% of her full pay and a further 33 weeks at the current SMP rate (this can be found on www.gov.uk
Families are responsible to pay for a nanny her if she is off sick. Statutory Sick Pay (SSP) is paid for the days the nanny would normally have worked. It is not paid for the first three consecutive days of illness (excluding days not normally worked) and would commence from the 4th day onwards. SSP is paid instead of, or as part of, the nanny’s normal rate of pay, for up to 28 weeks.
All UK employers are legally required to have an Employers’ and Public Liability Insurance cover. Employers, domestic and commercial, have a responsibility to provide a safe working environment for employees. Although nanny employers may believe their homes are hazard free, regulations aside, it is vital to protect yourself against circumstances that may be beyond your control.
Auto enrolment is a new law which requires all nanny employers to ensure that they have a pension in place for their employee. Most nannies will need to be automatically enrolled into the pension’s scheme, and both the nanny and the employer will have to contribute to it. It is applicable for any nanny whose salary is above £10,000 per year. If your nanny qualifies for automatic enrolment, you are legally obliged to enrol her/him. However, your nanny can always opt out of the pension’s scheme once they have been enrolled if they do not wish to take part.
Tax Free Childcare Vouchers
Tax-Free Childcare is a new government scheme to help working parents with the cost of childcare. Parents will be able to open an online account, which they can use to pay for childcare from a registered provider (in this case, the nanny would need to be Ofsted registered). For every £8 a parent pays in, the government will pay in an extra £2. Parents can receive up to £2,000 per child, per year, towards their childcare costs, or £4,000 for disabled children. The scheme will be available for children up to the age of 12, or 17 for children with disabilities. To qualify, parents will have to be in work, and each expecting to earn at least £115 a week. Each parent must not have income over £100,000 per year. For more information visit: