Nanny Tax

Nanny Tax Legal and National Insurance Responsibilities:

If you employ a nanny and pay them more than the tax and national insurance threshold (please refer to new rates and thresholds.) the law requires you to:

babysitter london
babysitter london

These obligations also apply:

Remember that National Insurance Contributions go towards your employee’s entitlement to unemployment and state pension benefits


Failure to register as an employer if you are paying your nanny above the weekly threshold is an offence, which can potentially lead to heavy penalties:


Because the position of maternity nurses and night nurses or nannies are temporary, they are regarded as self-employed.  However, nannies do not meet HMRC criteria for self-employment.  The liability to pay the nanny’s tax is on the employer and if it is not paid, the HMRC will pursue you the employer for the payment, not your employee (unless you have a contract in place which states the person you employ is working on a self employed basis).

Net or Gross Wage

Nannies are most likely to discuss their salaries with families in net terms (the amount the nanny receives into their bank account at the end of the week or month). In reality a nanny is always paid a gross wage which is their net wage plus their tax and national insurance contributions. On top of the gross wage the family may also be obliged to pay employer’s national insurance contributions, if the amount the nanny is paid exceeds the current tax threshold (for current thresholds and helpful tax calculators please refer to new rates and thresholds and tax calculator). Therefore, there can be a considerable difference between the net wage and the true cost of employing a nanny. Parents are therefore advised to always to always agree a gross salary with their chosen nanny.

Employer’s Responsibilities:

As an employer you are also responsible for:

It can be a daunting process becoming an employer for the first time and navigating through the tax system and dealing with the legal obligations, responsibilities and paperwork involved directly.

Payefornannies are a nanny payroll company that Outstanding Kids Nannies have patronised over the years.  They will support and guide you through the process and take care of all your payroll responsibilities for you.

You only need to supply them with some pieces of basic information like your nannies working hours, their rate of pay and their national insurance number. Payefornannies will register you as an employer, provide you with payslips, P60s, and process a P45 for you, they will also inform you how to pay the HMRC, and can offer advice on any payroll or legal issues that may arise.