Foodeditorjo - nannies generally can't set themselves up at self-employed - HMRC won't allow it, presumably because of the sort of unscrupulous employers we're discussing here. And although I agree with you when it comes to paying tradesmen, don't forget you're not their employer so it's a bit different. 

It's not confined to childcare: what about the tradesmen who are paid in cash so that the customer can avoid the VAT on top? This kind of thing is rife! And maybe, if this nanny does any other work, she should set herself up as self-employed/freelance and pay the tax/NI herself if she really wants the job, and ask for a higher hourly rate to cover at least some of this. I hear from a nanny friend of lots of appalling behaviour from parents who expect (rightly) a good job from the people looking after their children, but then don't pay the full hourly rate if they are paying for a part of an hour. Or quibble over the hourly rate in the first place, and negotiate down to peanuts, but still want a high-quality service. Some people almost seem to resent paying for childcare, yet they are putting their trust in someone to take care of their most important possession: their children. It makes me laugh, frankly, that these same women will think nothing of going out and spending £300 on a pair of boots. Priorities...

Love your reply, Kitkat04!

To “daddy daycare rocks”, I think you have missed one difference between paying cleaners and paying nannies. By some HMRC quirk nannies cannot be self-employed, they have to be employed. So there isn’t an option to pay them and then deal with their earnings as a self-employed worker. HMRC allows domestic cleaners to be self-employed, hence why it is legitimate to pay them cash; it is reasonable to assume they are self-employed, and they therefore deal with reporting their income.
The rules do appear inconsistent, but there we are.

It's illegal both for employer and employee. And ultimately that will be a problem is there's a dispute etc later on.

There's no shortage of nanny jobs here. She should move to another family.

I agree that employers who take this approach are likely to be bad employers in other ways too - they clearly don't see the nanny as a proper employee with the same employment rights that they expect themselves. Avoid. And if she is brave enough, report.

I do agree that childcare should be a tax deductible expense but that's a completely separate issue from how nannies should be paid.

The nanny should refuse to work for an employer who isn’t prepared to pay her correctly; it sets a bad precedent and the employer may start to behave unfairly or meanly in other ways too. I am not sure you can say the lack of childcare tax deductibility is sexist. The family unit not just the mother benefits from childcare to allow both parents to work (or single parent of whatever gender or none). Families with children get child benefit (up to a certain income) and the children get education and healthcare paid by the system, which childless people contribute to but don’t get the benefit of, so isn’t it swings and roundabouts in a way?

    

I certainly agree that childcare is a necessary condition for most of us to do our job. It does seem odd that one cannot deduct childcare expenses required while off on a business trip however one could choose to spend as little or as much on meals and hotels and it would all be deductible because it's "business related."

I suppose the 15 and 30 free hours is supposed to address this a bit. I think most people would argue it doesn't but perhaps that's the goal. I think many of us feel in the same boat here.

      

I'm not a tax expert but I would think HMRC would frown upon an individual deducting the expenses of a driver to drive him around for personal reasons or deducting the expenses of a personal assistant helping out with non-business tasks. I realize it's a tricky topic (drivers at work or PAs at work helping with the occasional personal task). But don't you suppose that anyone you know who is employing these people for primarily personal tasks (and deducting the expenses) is probably taking liberties with the law?

It would be like deducting your dry cleaning bill because it's the clothes you wear to work. If a company deducts cleaning expenses for company-owned factory uniforms perhaps that is one thing. If it's your personal clothes you wear every day to an office job cleaning is probably not deductible. Again, I'm not an expert and I am interested in other views. I can just tell you my accountant always advised me to pay my nanny from my post-tax personal income and would advise the same for a personal driver etc. He would also advise the proper payroll requirements for the sake of the nanny and the law. I'm just bringing this up because nanny expenses come up more often than personal drivers therefore I think there it is more closely monitored by HMRC. And in my limited sample size I can say that I know many people with nannies but no one with a driver. Hopefully this is numbers (not sexism) driving the focus by HMRC to insure the law is adhered to with regards to nanny payroll.

     

chorister wrote: And I'd love to know from AbbevilleMummy why on earth she thinks I as a taxpayer should contribute to the cost of her nanny by making it tax deductible.

Because other forms of staff are tax deductible - drivers, PAs etc

It is often pointed out that there is an inherent sexism in a system which makes the sort of staff typically employed by men tax deductible, but those more typically by women not so

As long as the system allows tax breaks for people who can’t be bothered to take the tube or a cab, I can’t get worked up about people playing the system to get the same advantage when employing a nanny to allow them to work and pay tax

personal view - really not good. i suppose it's a matter of degree, e.g.

best - all on the books;
next best - base hours above board & then odd bits of overtime, babysitting, etc cash in hand;
[etc]
worst [seriously morally wrong if the employers are leading anything vaguely approaching a luxurious lifestyle, I'd happily shop in anyone who I knew was doing it] - all cash in hand.

I hope this nanny turns down the job.

The employer is displaying dishonest behaviour before the job even starts. This is a sign that things could get worse. Of course it's not a guarantee, but it's a warning sign. Now suppose the employer does something worse in the future (doesn't pay as promised, acts inappropriately, etc.) and the nanny needs to report it. I can't imagine her credibility with the police and courts will be as strong once they discover she has been complicit in this payroll crime from the beginning.

Asking an employee to lie shows a lack of respect and ethics. And when there is no respect in the workplace it's usually just the tip of the iceberg.