Postby mummo » Mon May 23, 2011 9:21 am
It is a commonly held belief that nannies can be self employed, however it is not so much a 'choice' to be self employed but how the HMRC make the definition of what self employed status is. Be wary of employing on this basis and as juliantenniscoach says make absolutely sure that all the correct paperwork is in place if your nanny does claim to be self employed. It could come back to bite you, not them.
This is taken from nannytax.co.uk, see especially the last paragraph re self-employed status.
"When you take on a nanny you become a domestic employer and as such you have the same legal responsibilities as a commercial employer. It will be your responsibility to pay your nanny’s Tax and National Insurance to HMRC on the nanny’s behalf, as well as your own Employer’s National Insurance Contribution. You are also required to provide an employment contract within two months of the date they began working for you as well as a payslip each time they are paid and, in addition, you must keep payroll records and produce yearly accounts of all payments.
If you pay your nanny £102 or more gross per week, you must register as a domestic employer with HMRC and set up PAYE (Pay As You Earn) Scheme. If you are paying your nanny less than £136 gross per week there is no tax or NI to pay, however, if you are registered, your nanny will still be entitled to receive state pensions and benefits. If you are paying your nanny £136 gross per week or more, you must pay Employer’s NI. £139 gross per week or more means you must now also pay Employee’s NI on behalf of your nanny. Paying £143 or more gross per week to your nanny means tax is now due. These figures are effective from 6 April 2011 and the thresholds only apply if your nanny does not have another job and is on a standard tax code.
But it’s not my tax; can I get away with not paying it?
Absolutely not. It’s not the nanny that the taxman will be chasing; it’s you, her employer. You are not doing the nanny a favour by paying her Tax and NI on her behalf – you’re legally required to do so. It’s an offence to employ and not register as an employer with HMRC – you can potentially face hefty fines if caught, as well as interest on late payments of Tax and NI.
Can’t my nanny be self-employed and pay her own tax?
Nannies in permanent positions generally don’t meet the criteria set by HMRC for a self-employment status as a self-employed person can dictate their own working hours, whereas a nanny will be working to the hours that you, as her employer, will set. As her employer you therefore be responsible for paying her Tax and NI. Some nannies who supply an ad-hoc nanny service or some temporary nannies may be able to register as self-employed."