Payroll

Lollipop Childcare recommends two payroll companies who both offer excellent customer service helplines and full payroll services:  www.way2paye.co.uk and www.nannytax.co.uk

Information below supplied by Way2Paye.co.uk

Information For Parents Employing Nannies

Once you have found your Nanny you will need to consider how to calculate their wages. The options are:

Use a payroll service – Waye2Paye's Annual fee is £185.00

Use an Accountant – Can be Expensive

Calculate it yourself – Very time consuming

Not declaring employment – A criminal offence.

As an employer you are the key player in making sure that your employee(s) pay their tax and National Insurance Contributions (NICs). 
You must Tell HM Revenue & Customs when an employee starts or leaves
Work out accurately and deduct PAYE Tax and National Insurance Contributions (NICs) from each employee every pay day
Record details of deductions and payments every pay day
Pay HM Revenue & Customs every quarter
Report details at the end of the tax year
Give each employee still working for you at 5th April a record of pay and deductions at the end of the tax year on form P60. 
You may need to Deduct Student Loan Deductions every pay day
Make statutory payments to your employees such as Statutory Sick Pay or Statutory Maternity Pay
Waye2paye administer all HM Revenue & Customs requirements and provide you with experienced, friendly and professional service. Way2Paye will email or post you your employee(s) payslips. All you will need to do is give them the initial information on employee/employer, advise them of hours or amounts if they vary, make payments to your employee(s) on pay day and pay HM Revenue & Customs quarterly.

Nanny Share

Nanny Share is when two or more families employ a nanny to look after their children. It is advisable for each family to set up a separate PAYE scheme and agree a gross salary. This will result in a considerable saving in National Insurance Contributions (NICs) for each party. All Families set up a separate PAYE scheme. This saves on National Insurance Contributions (NICs) for each party. The families agree a fair split based on gross salaries.
Please note that net salaries need converting to gross salaries based on the standard tax allowance and the basic rate allowance for the split to be correct. One family then applies the standard tax allowance and the others apply the basic rate allowance. The family that operates the standard tax allowance will pay the more net pay to the nanny and less to HMRC. The families that operate the basic rate will pay less net pay to the nanny and more to HMRC. The cost is calculated fairly for each family. If the nanny works for one family on a different rate or more hours the split can be calculated accordingly.
If you would like Way2paye to calculate the split for you please do not hesitate to contact them. One family takes control and splits the costs. Please note that this is not always the cheapest option as the National Insurance is higher on higher earnings.
It is not advisable if the families are not familiar with each other. The Nanny requests a split tax code from the local tax office. The Nanny must explain to the tax office that they work for two or more families and that a net salary has been agreed. This can take several months to arrange and not all tax offices are happy to do this.

Savings for parents

Working Tax Credits
If your joint income is below £59,000 you may be entitled to working tax credits. Please visit http://www.hmrc.gov.uk/taxcredits/index.htm to see if you are eligible.

Employer supported childcare vouchers

These are provided by your employer. If provided each parent can be exempt from paying tax and national insurance on the first £55 per week they spend on childcare.
From October 2007 nannies need to register with Ofsted for employers to use the employer supported childcare vouchers. Nannies that are already registered will only need to apply to Ofsted when their registration expires. Registration is valid for 12 months.
Please visit http://www.ofsted.gov.uk to apply. The current cost is £103 for a new application form. This includes the CRB disclosure and needs to go through the post office verify system which costs approximately £8 admin charge. Additional costs will also apply if the nanny does not hold any professional qualifications or a first aid certificate.

You will also need Public Liability Insurance 
We recommend that as an employer you check that your household insurance policy includes an employer’s liability insurance to protect you if your nanny has an accident during working hours. Employer’s liability for domestic staff is often included as standard in most policies. 

Benefits in kind

The use of a car is only considered a taxable benefit if you allow your nanny to take it home. If your nanny uses the car for taking your children out for you this is not considered a benefit in kind. If however you allow your nanny to take the car home you must report it as class 1A national insurance will need to be paid.
If you give your nanny any benefits in kind please let Way2paye know and they will let you know if a P11D needs completing for you and class 1A national insurance is due.
HM Revenue & Customs Mileage Allowance for cars is currently 40p per mile for the first 10,000 miles then 25p per mile thereafter.

Paying your nanny

You must provide a payslip to your nanny each payday including gross pay, tax and national insurance and net pay.

Net – Gross

The nanny industry tends to talk net rather than gross. This is not a problem as long as the nanny does not owe student loans or has an unusual tax code. Agreeing a gross salary is always safer in contracts. Way2paye can easily calculate net to gross or gross to net payslips for you.
You may also need to calculate SSP and Maternity pay and deduct student loans. Way2paye can do all this for you.
The National Minimum Wage as of 1st October 2009 is: £5.80 Gross per hour the main rate for workers aged 22 and over. £4.83 Gross per hour the development rate for 18-21 year olds. £3.57 Gross per hour the development rate for 16-17 year olds.
Nannies that live as part of the family household and do not have separate accommodation are excluded from the NMW.
For employers who provide separate accommodation for their nannies there is an allowance of £31.57 Gross per week (£4.51 per day) this can be offset against the NMW hourly rate.

Holiday Pay

All nannies are entitled to holiday pay. Holiday entitlement begins from the first day of employment but cannot be taken until it has been accrued (e.g. one day’s holiday after 13 day’s work).
Part time employees are entitled to 5.6 weeks of the hours they work. You can agree with your nanny at the start of the employment that they take some of their holiday when you take your own annual leave.

New Holiday Legislation - The Working Time (Amendment) Regulations 2008
In brief the minimum holiday entitlement has increased from 4 weeks per year to 5.6 weeks holiday from 1st April 2009
i.e. Employees' that work; 1 day get 5.6 days holiday per year 2 days get 11.2 days holiday per year 3 days get 16.8 days holiday per year 4 days get 22.4 days holiday per year 5 days get 28 day holiday per year.
Whether or not this additional leave is taken on a Bank Holiday is up to individual employers to agree with their workers.
Employers may choose to offer more holiday than this.

Statutory Sick Pay

The current rate for SSP (statutory sick pay) is £79.15 per week. If your nanny is unable to work through sickness then you must either continue to pay as usual or pay SSP. SSP is payable after three days of absence.
Way2paye we will calculate it and claim any SSP back from HM Revenue & Customs on your behalf.

Statutory Maternity Pay

Statutory Maternity Pay (SMP) is paid for a maximum of 39 weeks from 1st April 2008 to employees who meet the qualifying conditions. Small Employer’s can recover 100 % of SMP Gross Pay plus 4.5% compensation.