Paying nanny part cash Post Reply

[SWHA]

Can anyone advise whether there is a legitimate way of paying a nanny part through paye and part cash? I know this is very common place and my new nanny brought it up and said she's happy with this arrangement as it's what she's always done with past employers.

Is it legitimate to pay for babysitting in cash therefore reducing weekly net amount (as contract includes a night's babysitting every week)? Or is there any other way people manage to get comfortable with such an arrangement?

I don't want to pay part cash if it basically amounts to tax avoidance.

Any advice gratefully received. Thanks.

[JThomas]

I see you have just joined - perhaps this is a wind up. If not, why would you want to pay your nanny in cash apart from to avoid tax?

HMRC would not approve of you paying for babysitting in cash and you would have to make a false declaration saying you had not done this. That said I imagine others do do this and posts on this site would anecdotally suggest people do worse eg paying part of the nanny's core hours in cash.

This is both worse than Starbucks (it is actually illegal) and is depriving your nanny of future benefits as they have paid less NI etc.

[SWHA]

Why would this question be a wind up? Tax is complicated and whilst I expect your response may be correct, from the research I have done this is a grey area. Yes the purpose of paying for babysitting would be to reduce tax bill but that doesn't automatically mean it's not legitimate. If you pay a normal babysitter you are not responsible for her tax/NI, it is for her to declare on her self assessment. Therefore if an employed nanny is providing either regular or occasional babysitting outside her main role (let's assume babysitting is not actually included in the contract) is this any different?

Seeing as so many people seem to do this I was interested to know if anyone had looked into it properly and come up with a definitive answer.

[wasateacher]

Once you have registered with HMRC it is very, very easy to sort out the tax. I got sent a computer disc and the rest followed. Look for details at: http://www.hmrc.gov.uk/payerti/getting- ... gister.htm

[lamj1974]

Honestly this poor lady who is new to the site asked a fairly standard question and has to have you respond in such a nasty way. Maybe she won't use the site again as you pointed out she's new so maybe if you feel like it's not right just leave it.

[MGMidget]

I would guess that her previous employers have paid cash for extra work not in her contracted hours and nanny has gone along with this taking cash. If she's declared on a tax return it its possible a retrospective tax charge might apply if her employers didn't declare it and pay tax at the time and if she didn't list it as 'self employed' income (and of course, have already registered a self employed business with HMRC). If you have agreed a 'net' payment contract with your nanny you might get clobbered with the extra tax bill as her tax code will change. Hopefully you've agreed a gross pay figure! More likely, however, the cash amounts weren't declared by either party.

To answer your question, no, if you are planning to pay cash with the idea that the nanny sorts out her own tax on this part by registering as self employed for babysitting, I don't think it would work. I'm sure the nanny's extra hours would be regarded as 'overtime' by HMRC and hence subject to employment tax like the rest of her job. You've already put one night's babysitting in her contract so that suggests that babysitting is part of her job anyway. I'm not a lawyer though, that's just my opinion!

I think you are compromising yourself if you go along with the nanny's suggestion.

[BettyBoo]

I have a nanny and if she does the odd extra hour for babysitting I give her cash. Not to avoid tax but because its easy and I have DD set up to pay her monthly salary which is all calculated via nanny tax.

It is rare occasions and not part of a regular agreement so if part of contracted hours then safest to go through the pAYE route.

Best

Betty

[firsttimerSW11]

I know of a few people who pay the nanny part cash in hand and only declare part.
I also know of a few people who employ South Americans, pay all cash in hand and don't declare anything at all.
Of course one shouldn't, but that doesn't mean some people don't. Essentially it is fraud so there really isn't much ways of getting around it legally.
Personally I find it very unfair you one has to pay a nanny (essentially an employee) from your net salary when any other employer pays for its employees from its pre tax income but that's just the way it is unfortunately.

[Mellomumma]

I have always paid our nanny cash when babysitting but pay her regular hours PAYE. There are people who pay part or all cash in order to reduce their tax bill but it is really up to you and your nanny as you do run the risk of prosecution for tax avoidance. There are companies like Nanny Tax, Nanny PAYE who will sort all your tax etc. which for us takes the time and stress out of the tax and NI requirements.

[sh88]

Jthomas, no need for your comments really, the lady was merely asking for some advice from others that may be better informed. Considering your lengthly time with the website you should be a little more considerate and less judging.


I have worked as a Nanny and never accepted cash payments that hasnt gone through PAYE. And for the sake of a bit of babysitting, its not really worth the risk as it is tax avoidance on both sides. If I have ever babysat for a family I would write them out a invoice and declare it on my self assesment. If the nanny if self employed then thats another story. I would suggest that you declare all her wages or suggest she registers as self employed.

Goodd luck!