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
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
You must pay them at least the minimum wage. The following table details the national minimum wage rates for 2020/21.
Under 18 years
18 – 20 years
21- 24 years
25 years and over
Apprentices are entitled to the apprentice rate if they are either:
We have a handy salary calculator to help you work out how much to pay someone.
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
You should run extensive and comprehensive checks before making an offer of employment to a nanny or housekeeper.
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 Payroll & Legal can help with DBS checks, if applicable, with fees from £100.
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.
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:
PC Payroll & Legal 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 £99.
If you are paying your nanny or housekeeper £120 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 & Legal 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.
From April 2019, the personal allowance be £12,500, and the higher rate threshold will rise to £50,000.
You must automatically enrol your nanny or housekeeper into a pension scheme and make contributions to their pension if all the following apply:
Thresholds for 2020/21 are as follows:
Employer minimum contribution
Staff minimum contribution
Total minimum contribution
PC Payroll & Legal can assess and guide you through the auto-enrolment process then operate it on an ongoing basis.
PC Payroll & Legal 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