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Types Of Nannies
There
can be a few different types of nannies
Nanny
Shares
Due
to the increase in a nannies pay over recent years many parents
are finding it more cost effective to 'share' a nanny with another
family. Essentially all this means is that your nanny has another
job running concurrently with her employment with you. Normally
this creates little or no concern to an employer however in the
nanny industry things can be a little different.
Problems
usually arise when nannies agree a net salary with each employer
without either the nanny or employer considering fully the tax implications
of the nanny having a second job. In the UK an individual has a
personal tax code (503L in tax year 2006-2007). This code means
that they receive just over £5030 tax free each year via PAYE.
After the tax free allowance we have a 10% band then 22% and finally
40%.
If
a person has a second job however, the Income Tax in that second
job starts at the 22% band leaving out the tax free allowance and
10% banding. For a second employer paying a net salary (i.e parent
picks up the tax bill) this will mean one family pays a disproportionately
higher tax bill than the other.
The
Nanny Share Options
Tax
Code Splitting 'our specialty'
If
both families involved in the Nanny Share are using the DomesticPaye
service we are able to consult with the Inland Revenue and accurately
split your nannies tax free allowance between employers proportionately.
This can be a time consuming process however we have found it
achievable and more importantly a very popular option for parents.
Paying
Gross
By
agreeing a gross wage with your nanny and not a net wage the tax
bill your nanny has is paid for by her and not you. This lets
you limit your total cost of employing your nanny to the gross
wage + Employers NI. In a Nanny Share situation it means an employer
can effectively forget about unpredictable implications of second
jobs.
Live
in Nannies
Live
in nannies are a great way of have almost 100% flexible childcare
in your home. Their are tax implications if your nanny has a separate
front door and gas metering as this maybe considered a benefit in
kind. In practice most nannies are given a room in the household
which mean no additional tax and also interestingly means an exception
from the National Minimum Wage.
Live
out Nannies
Live
out nannies live away from the family home and are probably the
most popular choice for parents at the moment. This style of nanny
arrives at work each morning and leaves every night thus working
to a pre arranged set of hours. We must advise parents that NannyPaye
has found a disproportionately higher rate of absence due to sickness
from live out nannies in comparison to live in. Perhaps its easier
to 'pull a sickie' if you live out? We can only guess.
Temporary
Nannies
A
temporary nanny is exactly that, she temporarily works for you as
your employee. As such you will need to register her as your employee
with NannyPaye and make sure taxes are deducted from any wages.
It is very rare (not impossible) for a nanny to be self-employed
so we advise parents to check with the local tax office before employing
any self employed nanny that she is as she says.
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