A brief summary of Nanny Tax issues
There are no special Nanny Tax or national insurance rates, nannies are treated for tax purposes just like any other employee. What is special is they may have benefits in kind; these are often accommodation, meals and the use of a car. For the tax year 2008-9 provided your nanny is paid for all her jobs less than a total of £116 a week there is no tax to pay. You are obliged to pay your nanny no less than the national minimum wage of £5.73 per hour for people aged 22 years or older, lower rates apply for younger workers. As well as your nanny’s’ salary you must also pay employers National Insurance. Employers National Insurance at 12.8% is also payable on benefits in kind.
The Nanny Portrait
All these things make Nanny Tax issues a minefield for parents. Many parents therefore choose to shed themselves of this burden by making use of services that specialise in nanny payroll issues not only calculating tax and submitting the forms but also advising on such issues as the cost to nanny and parents of benefits in kind. Let me tell you one final reason for you to use a specialised and experienced nanny payroll service. As an inducement for small employers to file tax returns electronically, the Government are offering a £75 rebate on your tax bill for this tax year. Most nanny payroll services do offer such an electronic service making a payroll service look even more attractive.