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June 1st, 2020

How do I set up payslip and begin paying taxes for my nanny?

Many families are struggling at the moment and would really need childcare support but lack the courage to do so due to the wide range of legal concerns to learn and accomplish. A starting family, especially the ones who are new to employing a nanny. Worry no more since this article will answer basic questions regarding payslip, taxes and the agency that could help you through it all.

Hiring a nanny would need more than just contracts and wages, it would also require a payslip — a document needed on or before payday that tells how much wage is earned on a weekly or monthly basis, depending on the employer’s demand. The payslip must show the pay before any valid deductions like repayment of loan or advance of wages or personal subscriptions or pension, the employee’s national insurance contribution, tax, the pay after the deductions and the number of hours worked. This is a valid proof that the nanny is updated on their tax payment.

How Do You Start Making Payslip and Begin Taxes for Your Nanny?

The family would need a set of documents first. Initially, the nanny must provide a P45 form which will come from the family he/she last worked for. This document will give a background check with regards to the tax the nanny has paid from the previous years including the amount deducted and the tax code during the time when you leave your last job.

On the other hand, the nanny could complete a starter form and fill up all the necessary details needed. Once all the data is gathered, the employer must report the wage and deductions to HMRC for complete, transparent regulatory matters.

What does your Payslip contain?

  • Payslip primarily contains the nanny’s information — Name, NI number, tax code, date of payment.
  • The nanny’s net salary
  • National Insurance contribution per payslip and pension contribution
  • Other legal deduction that the nanny and the employer agreed upon
  • The total amount of deduction
  • The total amount of wage that the nanny will receive
  • Tax reference
  • Summary update on the nanny’s contribution

What should I do after the Payment?

Another important step after payslip and payment of the nanny is the Full Payment Submission (FPS) which is the report of the said payment to HMRC along with the additional payments or deductions made.This must be submitted on or before your usual date of payday regardless of when you actually paid the nanny.

What are the possible deductions from my nanny’s salary?

Aside from the nanny’s obligatory contribution and tax, the employer is allowed to deduct the following:

  • if it’s something the nanny did and the contract says they’re liable for it, for example, a broken antique, house decor or appliance
  • If the nanny applied for a loan
  • if the nanny asked for advance wages (whatever the use maybe)
  • accommodation charges like rent, electrical bills, gas, laundry — depending on the job that the nanny applied for. If the nanny is hired in a live-in position, the family will need to include the accommodation in the contract.
  • Late, absences and leaves

Additional payments could also be included in the nanny’s payslip. This could contain:

  • work-related reimbursable expenses like taxi fare, food expenses or the likes of such
  • salary increase or incentives
  • additional fee when and if the employer made a special arrangement that isn’t written in the contract such as overtime fees
  • Holiday pay unless the employer pays it in advance
  • Extra payment when travelling, again depending on the contract with the employer
  • Medical or maternity suspension payments
  • bonuses either quarterly or annually

What Should a Nanny Do?

Before working for a certain family, make sure that they are registered as an employer to HMRC with a PAYE scheme system. This will secure their tax payments and contributions so that everything is done legally and in writing. PAYE scheme will also track your record which you could check in case needed, although keeping all your payslip for your personal copy wouldn’t hurt.

The payslip contains possible information like your nanny tax amount and national insurance contribution as well as your tax code to help identify your data in the system.

How Do I Pay Taxes for my Nanny?

Given the benefits and importance of tax and as their civil obligation, nannies along with other employed professionals should pay tax from the money they earned. This is done through the Pay As You Earn (PAYE) scheme which will be operated by the employer or will be automatically generated through an agency’s payroll system. In this case, the Little Ones will gladly help the families and take care of all tax-related expenses for an easier salary transaction.

What the company does is calculate the tax billing and the employee’s national insurance contribution altogether and send them to the clients providing them bank details of HMRC and the detailed process to pay them. Little Ones will then assist the family in paying the nanny’s weekly or monthly wage as well as the employee’s national insurance contribution and income tax to the government using their system.

Do I Really Need to Pay My Nanny’s Tax?

Yes. An employer who doesn’t pay their employee’s tax nor pay the correct amount of it is considered a criminal offence. Therefore, employees must be really particular to discuss this arrangement to their employers. Some of them fail to do so and assume that their employers are taking charge of their taxes, just to end up having legal problems upon learning otherwise. When tax is not paid, both employers and employees would face the following damages:

  • Tax and National Insurance Contribution payment plus interest to HMRC
  • Additional fine and lack of Real Time Information (RTI) which aims to improve how employers submit PAYE to HMRC
  • Investigation with possible legal charges, prosecution and imprisonment

This is one of the importance of why it is necessary to undergo the hiring process with an established agency with a professional team who knows all the essential processes like the Little Ones.

What if I Paid Late for PAYE and National Insurance?

Of course, every legal and government-related matter should be handed out on time to avoid unwanted penalties. HMRC is reported to charge a fine for employers who don’t pay their nanny’s PAYE amount and National insurance contribution in full and on time. The first instance of late payment is let off but the second to third instance would result in 1% of applied to the amount that is late in the relevant tax month. Daily interest will pile up and will be added on the unpaid amount.

Paying less than the supposed amount is also considered a late payment. There will be an additional penalty of 5% of the unpaid amount if the employer is still negligent after 6 months, a further penalty of 5% if the employer has not paid after 12 months.

Consequently, the employer will receive a notice as a summary of what you owe, how to pay and what to do otherwise since there may also be discrepancies in the part HMRC like an incorrect date on the returns. Death, fire or other natural disasters, ill health, technology difficulty or incapacity, theft or crime could also be cases that HMRC will accept.

If not, according to, the penalty should be paid within 30 days of the receipt of the notice unless you want to be charged with interest.

Settling this will definitely be a sort of inconvenience. This is why you need the help of Little Ones. Their team of professional employees would make sure you never have to encounter this kind of problem.

Why Work with Little Ones?

All the trouble of doing these mandatory requirements would be easy if you put them all in the hands of qualified individuals. Little Ones is just the right company for that as the leader of Nanny Payroll Services for more than 15 years today.

Little Ones UK isn’t just an established and growing childcare and housekeeper provider. This company is led by a team of experts who assist clients in the most extensive way. They offer payroll services even to those that aren’t considered clients but the full advantage will be experienced when the client registers with us.

Initially, if the family registers as a client of Little Ones, they will get completely 6 months of free payroll services from your nanny or housekeeper’s start date. This means that the company will be in-charged not only for generating payslip but the entire payroll services. This includes:

  • Registering you as an employer
  • Setting up a PAYE scheme
  • Generating weekly or monthly payslip
  • Tracking your nanny’s Insurance contribution and Income Tax and providing instructions on how to pay these
  • Assist with filing your annual tax return
  • Handle the complete record of payroll
  • Access to our HR services
  • Support on any work-related queries including maternity and sickness

With the Little One’s excellence and commitment, the team pride themselves on being able to delicately align a premium, luxury service to those who put their trust in them. Please call the Little Ones Nanny Payroll team for more information on 0207 183 6795.

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