When a parent advertises for a "sole charge" nanny they mean that the nanny will be responsible for the children's care on their own, not with mum or dad around at home. This is typical of a nanny job where the nanny is working for a family in which both parents have full-time jobs.
However even when a nanny job is advertised as being "sole charge", there may be times when a parent comes home from work early or works from home. In a "sole charge" nanny job such occasions would be rare rather than the norm.
Where a parent works from home, they may consider the nannies job as being "sole charge" as when working the parent is not available to respond to the children. Nannies taking on this kind of job should check with the parent as to where the parent will actually be working, as if they are working in the same building as the nanny is providing childcare, then the children may feel that mum/dad is contactable... even if mum/dad feel they are not. If a child cries then mum/dad may naturally want to respond to their child's cry - it can be very hard for a parent working from home to totally isolate themselves from their children, physically and emotionally.
Wednesday 24 June 2009
Tuesday 23 June 2009
UK: How does taxation work when a nanny has two jobs?
When a nanny has two jobs, I feel the easiest way of doing taxation is for one job to be classed as the Primary job and the other job to be classed as secondary.
The primary job should be the one in which the nanny earns the most salary ideally, though it doesn't really matter as long as the salary is above the personal tax free allowance.
Employers of nannies should be agreeing Gross salaries, as is the situation in any other line of work.
An example of how it works for a nanny with two jobs:
Nanny working 10 hours per day, 3 days per week, being paid £10 gross per hour. No Student Loan Deductions, or any other special case such as being married or being a widow.
To help keep things simple: employees start date is 6 April 2009 and assuming that this is the nannies first job, so we have no tax to date to deal with.
Based on information in P49 for when no P45 is presented, persons only job, initial taxcode: 647L cumulative NICs Category A
Weekly Gross Pay: £300
Week 1
Earnings at the LEL (where earnings are equal to or exceed the LEL) £95
Earnings above the LE, up to and including the ET £15
Earnings above the ET, up to and including the UAP £190
Earnings above the UAP, up to and including the UEL £0
Total of employee's and employer's contributions £45.33
Employee's contributions due on all earnings above the ET £20.95
Employer's Contributions £24.38
Paydate: 10 April
The Col references below are for the PAYE form P11.
Col 2: 300, Col3: 300, Col 4a: 124.61, Col 5: 175.39, Col 6: 35, Col 7:35
Gross Pay £300
Employee NICs £20.95
Employee Tax £35
NET PAY £244.05
Employer's NICs £24.38
Total cost to the employer: £324.38 (Gross Pay + Employer's NICs)
Total payment to HMRC: £80.33
In Week 3 the nanny takes on another job. To keep the figures as similar as possible, will use 20 working hours at the higher pay rate of £15 per hour.
Thus in Job2 this nanny is working 20 hours at £15 per hour, thus earning £300 per week. BOX C on P46 has been ticked, so tax code is BR cumulative
Week 3 – Job2
Earnings at the LEL (where earnings are equal to or exceed the LEL) £95
Earnings above the LE, up to and including the ET £15
Earnings above the ET, up to and including the UAP £190
Earnings above the UAP, up to and including the UEL £0
Total of employee's and employer's contributions £45.33
Employee's contributions due on all earnings above the ET £20.95
Employer's Contributions £24.38
Paydate: 24 April
The Col references below are for the PAYE form P11.
Col 2: 300, Col3: 300, Col 6: 60, Col 7:60
Gross Pay £300
Employee NICs £20.95
Employee Tax £60
NET PAY £219.05
Employer's NICs £24.38
Total cost to the employer: £324.38 (Gross Pay + Employer's NICs)
Total payment to HMRC: £105.33
From this example you can see that the cost to the employer is the same £324.38
The amount paid to HMRC is different. The amount paid to the nanny is different.
In the example above, the second job is the same Gross Salary which makes it easier for us to be able to compare it with the primary job. In reality I would not expect the second job to be the same gross salary, though it is possible that it may happen.
In the second job, as the primary job is using all of the nannies tax free personal allowance, all of the income is taxed. This means that the amount deducted by the employer for the employees tax is higher. This is passed to HMRC by the employer, on the nannies behalf. As the gross pay amount is the same, the National Insurance Contributions are the same. As the gross pay amount is the same, each employer pays the same Employers National Insurance Contributions.
Employers of nannies SHOULD ALWAYS agree a Gross salary, not Net (take home pay). Agreeing a Net salary is very old fashioned in my view and will cause you as the employer grief in the long run, as your nannies taxcode can change during their time in your employment, plus tax rates can also change. As you can see from the example above, it does not matter if you are able to use any of the nannies personal tax allowance or not... the cost to you as the employer is the same regardless. The difference comes in the amount of tax you deduct from your nannies salary and pass on to HMRC.
This was prepared on 23 June 2009. Due to the way taxs work in the UK the figures in this calculation will be outdated at the next tax change (probably April 2010). However the principle remains the same.
The primary job should be the one in which the nanny earns the most salary ideally, though it doesn't really matter as long as the salary is above the personal tax free allowance.
Employers of nannies should be agreeing Gross salaries, as is the situation in any other line of work.
An example of how it works for a nanny with two jobs:
Nanny working 10 hours per day, 3 days per week, being paid £10 gross per hour. No Student Loan Deductions, or any other special case such as being married or being a widow.
To help keep things simple: employees start date is 6 April 2009 and assuming that this is the nannies first job, so we have no tax to date to deal with.
Based on information in P49 for when no P45 is presented, persons only job, initial taxcode: 647L cumulative NICs Category A
Weekly Gross Pay: £300
Week 1
Earnings at the LEL (where earnings are equal to or exceed the LEL) £95
Earnings above the LE, up to and including the ET £15
Earnings above the ET, up to and including the UAP £190
Earnings above the UAP, up to and including the UEL £0
Total of employee's and employer's contributions £45.33
Employee's contributions due on all earnings above the ET £20.95
Employer's Contributions £24.38
Paydate: 10 April
The Col references below are for the PAYE form P11.
Col 2: 300, Col3: 300, Col 4a: 124.61, Col 5: 175.39, Col 6: 35, Col 7:35
Gross Pay £300
Employee NICs £20.95
Employee Tax £35
NET PAY £244.05
Employer's NICs £24.38
Total cost to the employer: £324.38 (Gross Pay + Employer's NICs)
Total payment to HMRC: £80.33
In Week 3 the nanny takes on another job. To keep the figures as similar as possible, will use 20 working hours at the higher pay rate of £15 per hour.
Thus in Job2 this nanny is working 20 hours at £15 per hour, thus earning £300 per week. BOX C on P46 has been ticked, so tax code is BR cumulative
Week 3 – Job2
Earnings at the LEL (where earnings are equal to or exceed the LEL) £95
Earnings above the LE, up to and including the ET £15
Earnings above the ET, up to and including the UAP £190
Earnings above the UAP, up to and including the UEL £0
Total of employee's and employer's contributions £45.33
Employee's contributions due on all earnings above the ET £20.95
Employer's Contributions £24.38
Paydate: 24 April
The Col references below are for the PAYE form P11.
Col 2: 300, Col3: 300, Col 6: 60, Col 7:60
Gross Pay £300
Employee NICs £20.95
Employee Tax £60
NET PAY £219.05
Employer's NICs £24.38
Total cost to the employer: £324.38 (Gross Pay + Employer's NICs)
Total payment to HMRC: £105.33
From this example you can see that the cost to the employer is the same £324.38
The amount paid to HMRC is different. The amount paid to the nanny is different.
In the example above, the second job is the same Gross Salary which makes it easier for us to be able to compare it with the primary job. In reality I would not expect the second job to be the same gross salary, though it is possible that it may happen.
In the second job, as the primary job is using all of the nannies tax free personal allowance, all of the income is taxed. This means that the amount deducted by the employer for the employees tax is higher. This is passed to HMRC by the employer, on the nannies behalf. As the gross pay amount is the same, the National Insurance Contributions are the same. As the gross pay amount is the same, each employer pays the same Employers National Insurance Contributions.
Employers of nannies SHOULD ALWAYS agree a Gross salary, not Net (take home pay). Agreeing a Net salary is very old fashioned in my view and will cause you as the employer grief in the long run, as your nannies taxcode can change during their time in your employment, plus tax rates can also change. As you can see from the example above, it does not matter if you are able to use any of the nannies personal tax allowance or not... the cost to you as the employer is the same regardless. The difference comes in the amount of tax you deduct from your nannies salary and pass on to HMRC.
This was prepared on 23 June 2009. Due to the way taxs work in the UK the figures in this calculation will be outdated at the next tax change (probably April 2010). However the principle remains the same.
Tuesday 9 June 2009
How Much Annual Leave Is Your Nanny Entitled?
A Nanny working in the UK is an employee like any other and thus is entitled currently (2009) to 5.6 weeks paid annual leave.
The 5.6 weeks can include Bank Holidays / Public Holidays or you as the employer can decide to off those days off in addition to the 5.6 weeks. If you need your nanny to work Bank Holidays / Public Holidays then they do not get any additional holiday entitlement... they still get the 5.6 weeks.
If your nanny works part-time - a few days per week, then use the BusinessLink Holiday Entitlement Calculator to calculate your nannies annual leave. The 5.6 weeks leave is pro-rata for part-time employees.
You should write a term into the contract which states the amount of annual leave provided plus the amount of advance notice needed to make a request to take annual leave. As the employer you are able to deny any requests for annual leave, if it is not convenient for you but you should aim to have a good working relationship with your nanny, so I suggest that you both try to come to agreement over holidays.
If you often go away on holiday and don't need your nanny to work, then you can ask your nanny to use some of their annual leave. Typically a nanny would expect to be told when to take 2 weeks of their annual leave... leaving the nanny to choose when to take the rest. If you go on holiday a lot then there may be weeks when you have to pay your nanny even though you are on holiday. It is your choice to go on the holiday, not your employees.
If you have school aged children you may want to limit your nanny to only be able to take time off during school holidays. This is perfectly legal to do but must be discussed with your nanny prior to implementing.
Keeping your nanny happy vs getting the most work from them is a balancing act. I would suggest that you consider how you would like a great boss to treat you and then treat your nanny as best as possible.
The 5.6 weeks can include Bank Holidays / Public Holidays or you as the employer can decide to off those days off in addition to the 5.6 weeks. If you need your nanny to work Bank Holidays / Public Holidays then they do not get any additional holiday entitlement... they still get the 5.6 weeks.
If your nanny works part-time - a few days per week, then use the BusinessLink Holiday Entitlement Calculator to calculate your nannies annual leave. The 5.6 weeks leave is pro-rata for part-time employees.
You should write a term into the contract which states the amount of annual leave provided plus the amount of advance notice needed to make a request to take annual leave. As the employer you are able to deny any requests for annual leave, if it is not convenient for you but you should aim to have a good working relationship with your nanny, so I suggest that you both try to come to agreement over holidays.
If you often go away on holiday and don't need your nanny to work, then you can ask your nanny to use some of their annual leave. Typically a nanny would expect to be told when to take 2 weeks of their annual leave... leaving the nanny to choose when to take the rest. If you go on holiday a lot then there may be weeks when you have to pay your nanny even though you are on holiday. It is your choice to go on the holiday, not your employees.
If you have school aged children you may want to limit your nanny to only be able to take time off during school holidays. This is perfectly legal to do but must be discussed with your nanny prior to implementing.
Keeping your nanny happy vs getting the most work from them is a balancing act. I would suggest that you consider how you would like a great boss to treat you and then treat your nanny as best as possible.
Sunday 7 June 2009
How To Recruit A Nanny - Part 2: Nanny Agencies
Before the internet parents who wanted to employ a nanny would typically approach a Nanny Agency who would assist parents in selecting a suitable nanny.
The internet in my view has changed the way nannies are recruited. Nanny Agencies can charge from several hundred pounds to several thousand pounds. Whereas internet recruitment websites may charge less than thirty pounds.
However parents still do use nanny agencies, especially if it is the first time they are recruiting a nanny. Why? Well I suspect it is to do with having someone else provide all the necessary information and advice, plus it removes some of the hassles of finding a nanny.
A nanny agency will typically have a selection of nannies on their books who they know are looking for work. The agency will try to match the parents requirements with a suitable nanny. If none of the nannies on the agencies books meet the requirements, then the agency will advertise for nannies.
Before accepting a nanny onto the agencies books, the agency will interview the nanny and check references, training certificates, make sure the nanny has an Enhanced CRB (Criminal Record Bureau) check, plus will discuss with the nanny about what positions they feel they are suited to. For example, when I have been interviewed by nanny agencies, I like to make it clear that I prefer working with babies & toddlers. That then helps the agency in placing me with a family whom has a baby or toddler.
Agencies will check a nannies references but due to the Data Protection Act it appears that if a parent wanted a copy of the reference, the agency may not be in a position to provide that. For more information and a discussion about this see: Mumsnet: Nanny References
The agency will provide you with a short list of nannies whom you can then choose to interview. When you interview the nannies, I would suggest that you ask them to bring with them written references and provide a couple of phone numbers of families you can chat with. That way you can see their written references plus obtain verbal references for yourself. That combined with the feedback from the agency with regard to the references they checked should be sufficient to help you make the recruitment decision.
The agency is there to support you. They should be able to provide you with advice with regard to the nannies contract of employment, taxation rules (they may run their own payroll service, or will be able to provide details of one - such as PAYE for Nannies), plus provide general advice about employing a nanny.
The internet in my view has changed the way nannies are recruited. Nanny Agencies can charge from several hundred pounds to several thousand pounds. Whereas internet recruitment websites may charge less than thirty pounds.
However parents still do use nanny agencies, especially if it is the first time they are recruiting a nanny. Why? Well I suspect it is to do with having someone else provide all the necessary information and advice, plus it removes some of the hassles of finding a nanny.
A nanny agency will typically have a selection of nannies on their books who they know are looking for work. The agency will try to match the parents requirements with a suitable nanny. If none of the nannies on the agencies books meet the requirements, then the agency will advertise for nannies.
Before accepting a nanny onto the agencies books, the agency will interview the nanny and check references, training certificates, make sure the nanny has an Enhanced CRB (Criminal Record Bureau) check, plus will discuss with the nanny about what positions they feel they are suited to. For example, when I have been interviewed by nanny agencies, I like to make it clear that I prefer working with babies & toddlers. That then helps the agency in placing me with a family whom has a baby or toddler.
Agencies will check a nannies references but due to the Data Protection Act it appears that if a parent wanted a copy of the reference, the agency may not be in a position to provide that. For more information and a discussion about this see: Mumsnet: Nanny References
The agency will provide you with a short list of nannies whom you can then choose to interview. When you interview the nannies, I would suggest that you ask them to bring with them written references and provide a couple of phone numbers of families you can chat with. That way you can see their written references plus obtain verbal references for yourself. That combined with the feedback from the agency with regard to the references they checked should be sufficient to help you make the recruitment decision.
The agency is there to support you. They should be able to provide you with advice with regard to the nannies contract of employment, taxation rules (they may run their own payroll service, or will be able to provide details of one - such as PAYE for Nannies), plus provide general advice about employing a nanny.
Sunday 24 May 2009
How To Recruit A Nanny - Part 1: Advertising
The internet has changed the way that parents find nannies. In the past parents would use Nanny Agencies who would in-turn advertise in local newspapers.
Now the internet has made if possible for parents to advertise directly to nannies looking for work. In the UK the most popular nanny recruitment website is NannyJob.co.uk which lists thousands of nanny jobs throughout the UK and even some abroad. NannyJob is used by agencies, so if you want an agency to help with the recruiting, do not be surprised if the agency places an advert on NannyJob. NannyJob charges a listing fee, about £20 at the time of writing.
In some parts of the country, Gumtree.com is a popular way of advertising for a nanny. However it seems to me that this concentrates on Cities, so if you don't live in a city it may not be that good. Gumtree charges in certain locations but not others... so you may find that placing an advert does not cost you anything.
When composing an advert you need to know what is you actually want. Do you want a live-in nanny (a nanny who stays at your home day and night) or a live-out nanny (a nanny who comes to your home each morning and leaves again at the end of the working day)?
Online adverts can often be quite long, so I feel you should give as much information as possible. In particular I feel you should be clear about:
- the working days and hours
- how much you will pay
- what housework duties you expect to be done (such as washing children's clothing, ironing etc)
- as clear as you feel able about your location - for example if in London, state the nearest tube station.
- start date
Saying how much you will pay seems odd to some people. I feel you should give the salary (or a salary range) so that you don't waste your own or other peoples time. If you can only afford to pay £6 per hour, yet applicants want £10 per hour, then it is not worth them applying for your job.
The purpose of your advertisment is to get suitable candidates interested in your job offer. It is not to get everyone interested in working for you - you want the job advert to act as your first line filter... to weed out the unsuitable applicants leaving you with a handful of applicants to interview.
In England, Ofsted are now registering nannies. Many parents are now wanting to use Childcare Vouchers to part-pay a nanny and thus require a nanny who is already Ofsted Registered, or a nanny who meets the criteria and could apply for registration. If you are recruiting in a hurry and need to use Childcare Vouchers, then state in your advertisment that you require the nanny to already be Ofsted Registered (as the registration process can take a few months).
Other places to advertise include local village shops, such as a newsagents. Local newspapers are also an option - though can be expensive compared with internet advertising.
You may want to leave advertising to a Nanny Agency. I will discuss Nanny Agencies in a later post.
How can I pay my nanny using Childcare Vouchers?
The rules for paying a nanny using Childcare Vouchers varies depending on which country you are in... alas it isn't the same throughout the UK. As I nanny in England, I will explain how the Chidcare Voucher system works for parents who employ a nanny in England.
In England, nanny employers who want to pay their nanny using Childcare Vouchers need to get their nanny to register with Ofsted on the Voluntary Part of the Ofsted Childcare Register. You should ask your nanny to read the Guide to Registration on the Ofsted Childcare Register. You nanny will need to meet the minimum requirements for registration, which includes: First Aid Training, Childcare Training, Nanny Insurance plus various other things... see the Guide for details.
The registration process can take several months. Once registered, your nanny will be sent a Registration Certificate which will include a unique identifier.
Your nanny then needs to contact the Childcare Voucher company. Who that is will vary as your employer will have selected a company to administer the scheme for them, or they may even administer the scheme in-house. If both parents are able to use Childcare Vouchers it is quite possible that their employers use different voucher companies, so your nanny will need to register with both voucher companies. Many voucher companies have a form which the nanny completes. That form together with a copy of the Ofsted Registration Certificate are sent to the voucher company, who then issue the nanny with a carer identifier.
Once your nanny has a carer identifier, you can then ask your payroll department to pay part of your salary via childcare vouchers - this is a deduction from salary scheme so can effect pension rights... so do check that the scheme is suitable for you - your HR department / payroll department will have some info available.
Childcare Vouchers can come in a variety of formats... some are physical paper vouchers while others are fully electronic. Some voucher companies require that you Authorise each voucher, others do not.
With paper vouchers, you get given the voucher as part of your pay and give the voucher to your nanny. Your nanny then contacts the voucher company to redeem the voucher - often by phone or via the internet. Then the voucher company processes payment and within a week the payment is in your nannies bank account.
What issues are there with Childcare Vouchers?
The major issue currently with Childcare Vouchers is the time it takes for the voucher companies to redeem the voucher. Therefore you allow ample time (I would suggest 2 weeks) for your nanny to be paid by the voucher company.
Your contract with your nanny will be to pay them on a specific date, typically at the end of the month. You will be in breach of your contract if you do not pay on time. Do not rely on the voucher company to pay on time. Instead the first month you get a childcare voucher, keep it. That month you pay your nanny as usual.
The following month, you can then use that voucher you have, to part-pay your nanny. Payslip wise this is a deduction from the NET Pay figure.
For example, if the NET Pay due figure is £780 and the voucher amount is £243 (this is the typical voucher amount), then you give your nanny the voucher plus £537 - these days you would pay your nanny via BACS directly into their bank account. Many parents use the Internet Banking facility provided by their bank.
Paying a Nanny - How do I go about paying a nanny?
It is important that you agree to pay your nanny a Gross salary, either as a monthly or yearly amount. A Gross salary means the amount before deductions for Income Tax and National Insurance Contributions (NICs).
Never agree a NET (take home pay) salary with your nanny. It can be very tricky to work out what your nannies real pay is if you agree a NET salary.
In the UK, you deduct Income Tax and NICs from your employees gross monthly pay and send that once every quarter (every 3 months) to HMRC. In addition as the employer you also pay Employers NICs.
There is a great website called ListenToTaxman.com which can help you get an idea of how much it will cost you to employ a nanny. The figures produced by ListenToTaxman.com are accurate but you should never use these figures for filling out PAYE forms. Please use the figures as a guide.
So what you may be wondering is PAYE. Well it is Pay As You Earn. It is the method of tax deduction that is used for all UK employees, as far as I am aware. You can find out further information about PAYE on the HMRC Website: PAYE Intro.
As an employer of a nanny you need to register with HMRC as an employer. They will then send you out a pack with most of the forms you will initially need, plus a CD-ROM (for Windows based PC's) which contains lots of other forms and help in electronic form. The CD-ROM also helps you file online PAYE returns.
If your nanny has come from a previous job, ask them for their P45. If they don't have that for some reason, they need to complete a P46 (which is on the CD-ROM or can be obtained from the HMRC Employers Helpline).
You will then follow procedures in P49 Paying Someone for the First Time. This will set the ball rolling as it were. P49 talks you through doing the first months payroll.
If doing all the payroll gets a bit complicated, or you would prefer someone else to produce payslips for you, then there are various nanny payroll companies who can help you. As a nanny I have found that PAYEforNannies is good.
Which countries can I have an Au-Pair / Nanny from?
Since November 2008 the rules regarding Au-Pairs in England have changed. The visa category of Au-Pair no longer exists.
An Au-Pair is now the same as a live-in Mothers Help or live-in unqualified nanny. They are an employee who works and lives at your home.
UK Border Agency says that an Au-Pair, Nanny or Mothers Help can come from the following countries:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Irish Republic, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. Iceland, Liechtenstein and Norway are not members of the European Union (EU) but citizens of these countries have the same rights to enter, live in and work in the United Kingdom as EU citizens.
Swiss nationals are also permitted.
There are special rules for those from Bulgaria / Romainia.
There is also Youth Mobility Scheme (Tier 5) which enables those from Australia, Canada & New Zealand to work in the UK (subject to terms of the scheme - Youth Mobility Scheme)
Can a Relative of mine Register as a Nanny so I am able to pay them using Childcare Element of Working Tax Credit?
The Childcare Act 2006 defines what is considered to be a relative,
18 (8) (c) “relative”, in relation to a child, means a grandparent, aunt, uncle,
brother or sister, whether of the full blood or half blood or by marriage or civil partnership.
Page 19 of HMRC Publication: WTC2 section titled: Childcare Provided By A Relative.
Childcare Element of Working Tax Credit cannot be used for childcare provided by a relative, unless that relative is a Registered Childminder who is also looking after other children.
HMRC and Ofsted are both aware that relatives are trying to register as childminders only to care for their grandchildren, nephews etc. How they actually check-up on that, I don't know... but I suspect that if when doing a registration inspection or subsequent inspections the Ofsted inspector gets suspicious that the children in the persons care are ONLY relatives, then action maybe taken.
Therefore I feel that NO you cannot ask a relative to register as a Nanny, or as a childminder so that you are able to pay them for providing childcare via the Childcare Element of Working Tax Credit.
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