There are various responsibilities that employers must fulfil when hiring a nanny, mothers help or nanny housekeeper. It is important to remember that the above are NOT normally considered to be self employed.
It is the nanny employer's responsibility to pay all the relevant liabilities (tax and NI) based on the employee's gross salary.
Employer’s Liability Insurance must be in place
An employment contract should be in place agreed by both parties
A pension scheme must be offered (auto enrolment). See notes below
The payroll can be run by an outside company and this makes the whole process much easier and straightforward. We recommend Nannytax (www.nannytax.co.uk).
Employers Liability Insurance must also be taken out if it is not already on your household insurance policy. Nanny Tax (www.nannytax.co.uk) and Morton Michel (www.mortonmichel.com) both offer stand alone policies
We can provide a sample contract to the new employers of all our placed nannies if they would like to use it. This is a word document that can be amended for your own use and is between the employer and employee.
Automatic Enrolment – Pensions
This is essential reading if you either employ a nanny or are a nanny!
What is Auto Enrolment?
This is a government introduced scheme and the aim is to help workers save for their retirement. It is becoming a legal requirement for employers to ensure they have a pension available for their employees.
Who will be affected?
All employers will be affected as they will have to enrol their workers in a pension scheme or make sure one is available. If the employee is over the age of 22, below the state pension age and earning above the tax free allowance (currently set at £10,000 +PA) then the employee will be considered to be an eligible jobholder. Unless the nanny has chosen (and not been asked to) opt out the employer, the nanny and the government will all make a contribution to the nanny’s pension.
What happens if the employer does not comply?
If employers do not comply when they should have done so they may be liable to a fixed fine of £400 PLUS a daily fine of £50 for every day they have been non-compliant.
Can you ask your nanny to opt out of the scheme?
It is against the law to ask your nanny to opt out of the scheme – this is called inducement and carries a heavy fine if caught.
Can the nanny opt out?
It is possible for the nanny to opt out if it is completely their decision and it has not been suggested to them. To do this they have to opt in first to prove it has been offered to them and they can then choose to opt out.
How much will this cost?
It is very important to remember that this will all be calculated based on the employee’s GROSS salary. If your nanny is eligible then it will be a requirement to pay a percentage of the gross salary into his/her pension pot. These percentages are being gradually increased over the next three years. See table at bottom.
It is therefore very important that the nanny’s contract is based upon a gross salary rather than net. The nanny’s contribution will then be paid out of her gross salary so the employer will only pay for their own contribution. If the salary is calculated on a net basis then the employer may well then end up paying for the nanny’s contribution as well.
When does this change come into effect?
For small employers, this is being introduced in stages from 1 June 2015 onwards – the latest possible date being some time in 2017. Your ‘staging date’ for this purpose is set by the Pensions Regulator and would depend on your employers’ PAYE reference.
For further details, please refer to the Government’s guidance for employers on Workplace Pensions at:
also please see
|Employers contribution||employees contribution||Govt contribution|
|Present – 30/9/17||1.0||0.8||0.2|
|1/10/18 – ongoing||3.0||4.0||1.0|