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tax calculator

Use this calculator to find out the approximate gross salary of a nanny based on the net payment the nanny would receive.

Safe At Home - the National Home Safety Equipment Scheme
On Friday 20 February 2009 Baroness Delyth Morgan launched 'Safe At Home' - an £18m National Home Safety Equipment Scheme which will be run by the Royal Society for the Prevention of Accidents (RoSPA) until March 2011.
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Employing a nanny









Employing a nanny








This advice brochure aims to guide you through the process of employing a nanny for the first time. As a parent, you will be well aware that it is important to find the correct person to care for your precious little ones. If there is anything else you would like to know please contact us and we’ll do our best to help.


As a parent employing a nanny you are entitled to claim some financial support to help pay for your childcare. There are 2 types of support available, both of which require your nanny to be ‘approved’ (see below – Ofsted Voluntary Register).


Working tax credits


Working tax credits are means tested. The amount of support you can claim will depend on your household income and situation. Higher income earners will not be entitled to any benefits and thresholds are dependent on a whole host of factors. For more information call the tax credits helpline on 0845 300 3900 or visit




Childcare vouchers


Childcare vouchers can be received by parents from their employer as part of their pay. The vouchers are income tax and NI free so you can save up to £933.12 per year, depending on your rate of tax. Both parents can have part of their pay in childcare vouchers so this could double the annual savings for the household, saving up to £1,866.24


Vouchers are means tested- all benefit but higher income tax payers can claim less- and there are no forms to fill in. However, your employer must already be signed up to (or be prepared to enrol in) a voucher scheme. The incentive for the employer is these vouchers are free from Employer NI obligations, potentially saving it over £400 per year. There are various voucher companies able to supply employers with such a scheme – details are below


Your employer can provide you with up to £55 a week (or £243 a month) in vouchers – paid as part of your salary (the amount is negotiable and will be agreed between you and your employer prior to commencement). This literally means that for every £1 you take in vouchers, you simply receive £1 less of your gross salary. Unlike your salary, there are no tax or National Insurance contributions to be paid on the voucher value hence the savings you can make.


Vouchers can be paid in paper form which you can then hand to your childcarer (who once registered with the voucher company will receive full instructions on claiming the money back) or e-vouchers can be issued to an online account which you can then transfer direct into the childcarer’s bank account.


Further information on childcare vouchers can be found on the following websites. Each individual voucher supplier will explain their registration procedures and can give full details of the whole process.        Tel:  0800 247 1233                 Tel: 0800 612 9015                               Tel: 0800 288 8727



Ofsted Voluntary Register


The Ofsted Voluntary Register replaces the Childcare Approval Scheme (CAS) and is a voluntary scheme which applies to all childcare provided in the family home (apart from that supplied by family members). It is only applicable to childcare provided in England.


The aim is to register suitable childcarers to provide peace of mind for potential employers of nannies by carrying out checks on individuals to ensure their safety to work with children.


To benefit from the above financial support, a family must use an ‘approved’ childcarer – one that has been registered and approved by Ofsted. Nannies can register as long as they meet the specific criteria below:


  • They must be aged 18+


  • Have completed the ‘common core skills’ training


  • Have a valid first aid certificate (attained within the last 3 years), relevant to babies and young children


  • They must be prepared to undertake a CRB enhanced disclosure.


Approval is valid for 12 months and costs around £103 per year for each nanny, which includes the cost of a CRB enhanced disclosure. Some families agree to help the nanny with the cost of the registration but this is entirely discretional between you and your chosen childcarer.


For further information call 08456 404040 or see the Ofsted website




Becoming an employer



Once you agree to take on a nanny you actually become their employer. For further information on becoming an employer you can call ACAS on 0845 747 4747 or visit their website


The Inland Revenue also have a new employers helpline which can be contacted on 08457 143 143.



Tax and National Insurance

When you employ a nanny you become her official employer just as you would when employing anyone else for any other type of business. Therefore, by law, you must account for Income Tax and National Insurance Contributions on the salary paid to a nanny or mother’s help. This applies to all types of home-based childcarers, whether they are full time, part time or temporary.

Unlike normal employment, a nanny's salary is usually agreed net of deductions (i.e. the amount she wishes to receive in her hand). Therefore it is the employer’s responsibility to pay the Inland Revenue, PAYE, Employees National Insurance and Employers National Insurance in addition to the net salary paid to the nanny. Other expenses paid to the nanny in addition to the salary may be liable to a separate charge for Tax and National Insurance purposes.

It is illegal to avoid the taxman and it is the employer’s responsibility to pay the nanny’s contributions. If the taxman catches up with a family who have not paid contributions on behalf of the nanny, it is the family who will be liable to pay the backdated Tax and National Insurance Contributions along with any interest and penalties. There is no legal right to seek repayment from the nanny.


Holiday entitlement begins from the first day of employment but cannot be taken until it has been accrued (e.g. one day’s holiday after 13 day’s work). Full time employees are entitled to 28 days holiday including bank holidays. You can agree with your nanny at the start of the employment that they take some of their holiday when you take your own annual leave.


The current rate for SSP (statutory sick pay) is £86.70 per week. If your nanny is unable to work through sickness then you must either continue to pay as usual or pay SSP. SSP is payable after three days of absence. Join Way2paye today and we will calculate it and claim any SSP back from HM Revenue & Customs on your behalf.


Statutory Maternity Pay (SMP) is paid for a maximum of 39 weeks from 1st April 2008 to employees who meet the qualifying conditions. Small Employer’s can recover 100 % of SMP Gross Pay plus 4.5% compensation. The rate is currently 90% of a nanny’s pay for the first 6 weeks her Maternity Leave, then £136.78 per week for the remainder of her Maternity Leave. The nanny is also entitled to take 3 months unpaid leave when her Maternity Pay period ends. On return, she needs to give 8 weeks’ written notice and should she want alternative hours to those on which she was originally employed, she must make a written case as to why she needs that change and how that will benefit her employer. Note too that the nanny will accumulate holiday entitlement, while she is on Maternity Leave.


Student loan deductions

The government requires employers to collect repayments of student loans through the PAYE system. Where a nanny is required to make such repayments, these will be deducted from his/her salary in the same way as PAYE and National Insurance and paid over to the Inland Revenue. Employers who pay their nanny a net salary need to make clear as to whether the net salary will be before or after making a student loan deduction. Failure by employers to administer the deductions properly may lead to a fine of up to £3,000.


National minimum wage

The national minimum wage for all age groups is detailed below:

Employees aged over 21+ must receive a minimum gross pay of £6.31 per hour

Employees aged 18-20 must receive a minimum gross pay of £5.03 per hour.

Employees aged 16-17 must receive a minimum of £3.72 per hour.

Figures are correct as of Feb 2014.

Working time directive

The working time directive lays down the rules relating to the number of hours an employee may work, holiday requirements and breaks to be taken during work hours.

The above information is correct at Feb 2014 and may be subject to alteration at any time following changes in legislation.


Payroll companies


If the thought of tackling PAYE fills you with dread, there are companies that offer the service of completing your nanny’s payroll for you (at a small charge annually of course!). There are a variety of companies which offer this service including:                            



Other important considerations


We advise all families employing a nanny to ensure that they have Employers Liability Insurance. This is to protect them in the event of their nanny having an accident at work which results in serious injury. Usually it is included in the household insurance policy or can be added as an extension to it.


If you require your nanny to use her own car for business use it is worth noting that many nannies will ask for a petrol allowance to help cover their costs. At the present time the approved mileage rate taken from the HM Revenue and Customs website ( is 40p per mile. This allowance should be discussed at interview and included in the contract of employment. Families should also satisfy themselves that the nanny has business use insurance on the vehicle to be used.




The contract is a vital part of employing a nanny as it states the exact terms and conditions for both parties involved. How you draw up your own individual contract is entirely up to you. Below is an example contract to give you some guidance:



Draft Contract


Date of Issue:    _______________________________________________________________


Start Date:                 _______________________________________________________________


Name of Employer:                                               

Name of Employee:


___________________________                    ___________________________


Employer'sAddress:                                              Employee's Address:


___________________________                    ___________________________


___________________________                    ___________________________


___________________________                    ___________________________


___________________________                    ___________________________


General Information:


Employers are required to deduct PAYE and National Insurance from the salary to be paid and to account for Employer's National Insurance contribution. Failure to do so will make the employer liable

for arrears.


Employers should ensure that they have employers and public liability insurance to cover them should staff be injured in the course of work.


Remuneration:  The salary is £__________ per hour/week/month in arrears on the last day in each working week/month by direct debit transfer direct to the employee's bank or by cheque (as directed by the employee at the commencement of the employment) less deductions for PAYE and National Insurance contributions.


The employer will be responsible for accounting for the employer's National Insurance Contributions.


The employer will ensure that the employee is given a payslip on the day of payment detailing gross payment, deductions and net payment.


The salary will be reviewed once/twice per year on: _______________________________________


Hours of Work: The hours specified below can only be changed by mutual agreement


Days required: ____________________________________________________________________


Hours required: ___________________________________________________________________


Baby-sitting requirements (if appropriate) _______________________________________________


Over time terms and conditions: ______________________________________________________


Specific Duties: The duties specified below can only be changed by mutual agreement










The Employee Shall Be Entitled To:


a)    Accommodation:     ____________________________________________________________


b)    Meals:                     ____________________________________________________________


c)    Use of car                    on duty/off duty/none


d)    Petrol costs will be reimbursed if the employee uses their own car at the rate of _______ per mile


e)    Other benefits         ____________________________________________________________




Holiday Entitlements:  The employee will be entitled to __________ weeks paid holiday each year to be arranged by mutual agreement. In the first or final year of service the employee will be entitled to holidays on a pro rata basis.


The employee is not entitled to paid compensation for holidays not actually taken, except by prior verbal or written agreement.


Holidays may only be carried into the next year with the express permission of the employer. The employee will be free on all Bank Holidays or will receive a day off in lieu, by agreement.


Sickness:  The employer will pay SSP scheme in accordance with legislation.  Any additional sick pay will be at the employer's discretion.


Termination:  The first ____ weeks/months of employment will be probationary.  The employment may be terminated by either party upon one week's notice in writing during the probationary period.  Following the probationary period, either party may terminate this contract by giving ____ weeks/months notice.


Confidentiality:  It is a condition of employment that now and at all times in the future, as may be lawfully required, the employee shall keep the affairs and concerns of the employer's household and its transactions and business confidential.


Discipline: In the event of the need to take disciplinary action the procedure will be:

Firstly - Oral warning

Secondly - Written warning

Thirdly - Dismissal


Reasons which might give rise to summary dismissal include the following:


a) Theft b) Illegal drug taking c) Child abuse d) Violent or threatening behaviour, be it verbal or physical


 Signed by the employer: _______________________  Date ________________




Signed by the employee:_______________________  Date ________________



Please note: the Agency accepts no liability whatsoever for the contents of any draft contract it may provide the Client with to enable the Client to enter into a written contract with the applicant. Any draft contract is supplied as a guide and has not been drawn up by a lawyer with any specific circumstances in mind. The Agency recommends that the client obtains its own legal advice in relation to the contract.

Updated: Feb 2014

Rebal Farr