Can I put my nanny on my company payroll Post Reply

[sgmitch]

Hi There,

We're in the process of hiring and nanny so we need to insure the payroll is setup properly. I realize there are some good payroll services out there however I am the director of a limited company and I'm already paying my accountant to do payroll for myself. They said it really doesn't cost them extra add her plus I have the convenience of not having to deal with a separate company for the nanny's payroll (and potentially pension auto-enrollment in the future).

The nanny would be an employee of my limited company but all of her net pay and the Employer NI would come from my personal funds. (I would simply apply it to the director's loan account and insure the account maintains the appropriate balance per HMRC requirements.)

Does anyone see a problem with this? Neither my accountant nor my bookkeeper sees a problem with this arrangement though they haven't done it before. My nanny agency said they have seen it done before. I would just like to hear a few other opinions if anyone has done this or has some knowledge.

As always, thanks for your time!

[AMumAtSW12]

I am afraid not. I have had the same situation for many years and my accountant says the only thing I could do is to take childcare vouchers out to the limited company. That is £55 per week direct payment from LTD to nanny, who will need to be registered to entitle these vouchers.

If you and your husband each have a LTD company, then you could do £55x2 per week.

I hope this helps.

[AMumAtSW12]

I am afraid not. I have had the same situation for many years and my accountant says the only thing I could do is to take childcare vouchers out to the limited company. That is £55 per week direct payment from LTD to nanny, who will need to be registered to entitle these vouchers.

If you and your husband each has a LTD company, then you could do £55x2 per week.

I hope this helps.

[AMumAtSW12]

To clarify further - my nanny has a separate payroll and not as an employee of any of our LTD companies (I am not sure if you can mix your business with childcare, unless they are similar businesses). I pay her NI+Tax+Pay from our personal account post childcare voucher. I have had this running for many years.

[szerma]

Hello,
The issue the other posters describe is if your nanny was paid by your limited company, which you imply isn't. All you say you are doing is setting up a payroll service.

It seems strange that they don't see an issue with it by my logic(as if your nanny is an employee of your company, her salary should show up as an expense of the company????) but I guess if you have the advice of your accountant and bookkeeper then you could go ahead with it. I also run my limited company but am using a payroll service for nanny payroll separately.

You can indeed get childcare vouchers and pay them directly from your company to your nanny's account (and reduce the amount you pay her in salary as a result). If you pay yourself the minimum wage and take your profits as dividends, then you can pay up to £243 per month, which is £55 per week indeed. You need to have a simple agreement with your nanny in the company name, provided she is Ofsted-registered. Pls send me a note if you would like a proforma letter.

Best of luck,
M

[sgmitch]

Thanks to both posters.

Actually I was not even including the added complication of childcare vouchers as she's not even registered at this point.

My main thought was that if we're paying with personal funds I can't see why HMRC would mind. It's a little like how my cable internet payment works. I work from home and pay for the entire amount of the internet bill with my business card. But when it comes to accounting, I only put through a percentage of it as a business expense and leave the rest on the director's loan account to account for there being a portion of personal use of the internet. It has seemed that HMRC allows these kinds of simplifications to make things more convenient for small businesses as long as all the accounting is done properly.

As for the other comment, I wasn't aware there was any stipulation on what kinds of activities can go on within a single limited company (saw no discussion in links I'm including below). I thought you could be in any market or industry as long as you follow the law and pay your taxes. But you have both given me further follow-up questions for my accountant. Thank you!

https://www.gov.uk/file-changes-to-a-co ... nies-house
https://www.gov.uk/running-a-limited-co ... ust-report

[darlingmummy]

hello OP,
the advice of both your accountant and book keeper is correct.
my director does exactly the same, housekeeper on the LTD company payroll but the salary is paid by her directly and offset against her loan account in the company.

I see no problem with you doing this