Key Facts to Employing a Nanny, Housekeeper or other Household Staff

If you employ a nanny, housekeeper or other household staff in the United Kingdom, you have the same legal responsibilities as a commercial employer, therefore the law requires you to:

  • Register as an employer

  • Set up and operate a PAYE (Pay As You Earn) scheme on your nanny’s behalf in accordance with RTI

  • Keep tax records on their behalf

  • Provide your nanny with regular pay slips

  • Provide them with an employment contract

  • Pay regular Income Tax and National Insurance contributions

  • Pay employer’s National Insurance contributions

  • File an employer’s annual tax return

  • Auto-enrol any eligible jobholder in a qualifying pension scheme

  • Provide them with an employment contract

Please be aware of the following:

  • Failure to register as an employer if you are paying your nanny above the weekly threshold (currently £118) is an offence, which can potentially lead to heavy penalties.

  • Failure to file employer’s annual returns by 19 May can result in penalties of £100 per month if filed late

  • Failure to pay all tax/NI liabilities before 19 April will result in interest being charged on the amount outstanding

  • Make sure your nanny is legally entitled to work in the UK

If it is the first time you are employing a member of staff there are lots issues to give consideration to.  PC Payroll has a Guide to Employing a Nanny or Employing a Housekeeper.

We recommend you take the following steps when employing a nanny, housekeeper or other household staff:
  • 1. Decide how much you will pay your new nanny or housekeeper

    You must pay them at least the minimum wage.  The following table details the national minimum wage rates for 2019/20.

    Apprentice

    £3.90

    Under 18 years

    £4.35

    18 – 20 years

    £6.15

    21- 24 years

    £7.70

    25 years and over

    £8.21

    Apprentices are entitled to the apprentice rate if they are either:

    • aged under 19
    • aged 19 or over and in the first year of their apprenticeship

    We have a handy salary calculator to help you work out how much to pay someone.


  • 2. Agree a gross salary

    We strongly recommend agreeing a gross salary, whether by hour, monthly or annually. This is to protect you, the employer, because it limits your liabilities. Conversely, if your nanny or housekeeper’s personal tax allowance is reduced for any reason and you’ve agreed to pay on a net amount basis rather than agree a gross amount, it will mean that you as the employer, will have to bear any additional costs incurred as the gross amount would therefore increase to keep the net the same.

    Salary Calculator
  • 3. Check their eligibility to work in the UK and other references

    You should run extensive and comprehensive checks before making an offer of employment to a nanny or housekeeper.

  • 4. Check they have a current DBS (formerly known as a CRB)

    We recommend that all nannies or staff who come into regular contact with children or other vulnerable members of your family hold a current DBS.   

    PC Childcare can help with DBS checks, if applicable, with fees from £100.

    Find Out More
  • 5. Get employment insurance

    As an employer, the legal duty lies with you to take out “Employer’s liability insurance” and to provide a safe workplace for your nanny (employee). Your nanny may be injured at work or may become ill as a result of working while in your employment. She might try to claim compensation from you if she believes you are responsible. Employer’s Liability Insurance would pay for the damages awarded and associated costs.

    If you don’t have Employer’s Liability Insurance, your nanny could make a claim against you, holding you responsible for the accident. This could result in you paying vast amounts from your own pocket and would affect the relationship you have built up with your nanny. Plus you can be fined up to £2500 for any day which you are without suitable insurance if you do not hold a current employer’s liability insurance policy which complies with the law.

    The easiest way to obtain employer’s liability insurance is to speak with your household insurers. Some household policies may automatically include this cover or you can ask that your policy is extended to cover it. If your household building and contents policy does not cover anybody working in your employment in your house then you will have to get a separate policy. This cost lies with you as the employer. You must be insured for at least £5 million. In practice, most insurers offer cover of at least £10 million in order to cover any extra costs such as legal fees.

    You must also display the certificate of insurance or make sure that it is available to be seen by your nanny. If you do not display the certificate of insurance or refuse to make it available to Health and Safety Executive inspectors when they ask, you can be fined up to £1000.

    It is also important that you have the correct motor insurance in place if your nanny uses a family car. The cost of motor insurance lies with you as the employer.

  • 6. Provide an employment contract to your nanny or housekeeper

    You need to give your nanny or housekeeper a written statement of employment (contract of employment) if you are employing them for more than one month.

    The Employment Rights (Employment Particulars and Paid Annual Leave (Amendment)) Regulations 2018 - comes into force on 6 April 2019 (and takes effect from April 2020), it implements parts of the Government’s Good Work Plan.  As an employer the main implications are:

    • The need to provide your new employee a written statement of their employment on day one, rather than as it currently stands within eight weeks of the start date.   
    • An increase in the amount of information such a written statement must contain.  
    • All employees are entitled to an itemised pay statement every month.

    Parental Choice can produce legal employment contracts which are fully up to date with current legislation and come with the added benefit of legal advice, if required, for the duration of that employment. Apply for a basic contract through our portal for £95.

  • 7. Tell HM Revenue and Customs (HMRC) by registering as an employer

    If you are paying your nanny or housekeeper £118 per week or more, you will need to register for PAYE and operate payroll. You can do this up to four weeks before you pay your new staff.

    The PC Payroll team can take the stress and hassle away from you so you are free to concentrate on family life, by administering your payroll and liaising with HMRC on your behalf.

  • 8. Personal tax thresholds

    From April 2019, the personal allowance be £12,500, and the higher rate threshold will rise to £50,000.

  • 9. Check if you need to automatically enrol your staff into a workplace pension scheme

    You must automatically enrol your nanny or housekeeper into a pension scheme and make contributions to their pension if all the following apply:

    • they’re classed as a ‘worker’
    • they’re aged between 22 and State Pension age
    • they earn at least £10,000 gross per year in your employment
    • they usually (‘ordinarily’) work in the UK

    Thresholds for 2019/20 are as follows:

    Employer minimum contribution

    3%

    Staff minimum contribution

    5%

    Total minimum contribution

    8%

    PC Payroll can assess and guide you through the auto-enrolment process then operate it on an ongoing basis.

    Find Out More
  • 10. Taxable benefits

    PC Payroll can advise you in relation to your employees taxable status for any expenses or benefits you provide as part of their employment.  For more details on the types of benefits/expenses click here

Help with Employing a Nanny

About Parental Choice

Parental Choice was established in 2011.  We provide childcare searches for working families, recruitment for nannies and other household staff alongside a comprehensive payroll, pension and employment legal services.

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