Being an employer you have to comply with many legal requirements. At a basic level you have to be aware of all of the following:-
- Current Tax Thresholds
- Tax Payment Dates
- National Minimum Wage
- Statutory Sick Pay
- Statutory Maternity Pay, Paternity Pay and Adoption Pay
Current Tax Thresholds
- As an employer you must register and pay National Insurance contributions on behalf of your nanny as employee and yourself as employer if you pay them £162 or more per week.
- You must also register if your nanny has another job, even if you pay them below the threshold.
- You also must register, although no Income Tax or National Insurance Contributions will be due, if you pay between £116 and £162 and your nanny does not have another job. This enables your nanny to receive a state pension and other benefits.
- From £162 per week, National Insurance Contributions are payable.
- Tax is only payable if you pay your employee £228 (if your nanny in on a standard tax code) or more per week and they do not have another job.
- The current personal tax allowance of £11,850.
Tax Payment Dates
If your monthly Income Tax and National Insurance bill is below £1,500 you only have to pay Income Tax and National Insurance contributions to HMRC on a quarterly basis.
Payment dates for the tax year 2018/2019 are:
- Cheque Payments: 19 July 2018, 19 October 2018, 19 January 2019 and 19 April 2019
- Electronic Payments: 22 July 2018, 22 October 2018, 22 January 2019 and 22 April 2019
National Living Wage & National Minimum Wage
There are different levels of National Living Wage (“NLW“) and National Minimum Wage (“NMW”) depending on age. The current rates since 1 April 2018, which are relevant to you as employers of nannies, are:
- £7.83 – The main rate for workers over 25 and over;
- £7.38 – For workers aged 21 – 24;
- £5.90 – For workers aged 18-20;
- £4.20 – For workers under 18; and
- £3.70 – For apprentices
Please be aware that it is a criminal offence for an employer to pay below the NMW / NLW. This offence currently carries a fine of up to £20,000. The NMW normally increases every year in April.
A nanny, who lives as part of the family household and is treated as a member of the family, and is not provided with separate accommodation, is excluded from the NMW. If you are providing separate accommodation for your nanny there is an allowance per 7-day week, which can be offset against the NMW hourly rate.
Employees may need to check that their employers are paying them (at least) the current NMW rate. Because many nannies’ wages are agreed on a net basis, this amount will have to be converted into its gross weekly equivalent and then divided by the number of hours worked in a week in order to establish whether it falls above or below the NMW. Please speak to us at Parental Choice for guidance.
Statutory Sick Pay
If your nanny is ill for 4 days or more, she is entitled to receive statutory sick pay (“SSP”) instead of or, depending on what her contract says, as part of her normal wages. The entitlement to SSP is limited to a maximum of 28 weeks in a three year period. There may be reasons why your nanny is not entitled to SSP including the fact that her contract is for 3 months or less. Please contact Parental Choice for further guidance.
The current weekly rate of SSP is £92.05.
You can no longer reclaim the amount paid out as SSP.
Statutory Maternity Pay, Paternity Pay and Adoption Pay
Statutory Maternity Pay (“SMP”) – If your nanny becomes pregnant and, providing they have been working for you for at least 26 weeks of continuous employment up to the beginning of the 14th week prior to the expected week of childbirth (“EWC”), you have to pay them SMP. Your nanny can only receive SMP if
- She has stopped work completely because of pregnancy or childbirth;
- Her normal weekly earnings in the 8 weeks before the start of the 14th week before the EWC are above the lower earnings limit for National Insurance contribution payments (currently £116); and
- She has reached the start of the 11th week before the EWC
The first six weeks of SMP are at 90% of average gross weekly earnings. The remaining weeks of the maternity pay period (up to a maximum of 33 weeks) are paid at the lower rate of £145.18 gross per week, or 90% if average weekly earnings are lower. SMP is subject to Income Tax, National Insurance contributions.
As an employer you can reclaim at least 92% of the gross amount of SMP you have paid by deducting it from the total of Class I National Insurance contributions due to be paid in any relevant tax month. If your gross National Insurance bill doesn’t exceed £45,000, then you will be entitled to recover 100% of SMP paid, plus an additional compensation of 3% of the total SMP paid. Please contact Parental Choice for guidance.
For further information on SMP, maternity leave and maternity rights both before and after childbirth please go to Maternity section.
Statutory Paternity Pay (“SPP”) – New fathers are entitled to take up to two weeks’ SPP, to be taken all at the same time. The current rate per week is £145.18. Fathers must have been employed continuously for 26 weeks before the 15th week of EWC. There are also a number of other qualifying factors. Please refer to Paternity section for further details.
Statutory Adoption Pay (“SAP“) – If your nanny is adopting a child and providing they have been working for you for at least 26 weeks prior to the date the adoption is approved, they are entitled to SAP. The conditions for SAP are the same as those for SMP, except the employee must have stopped work because of adoption leave.