Tax Guidance Sheet

Your nanny's tax and National Insurance contributions

As becoming an employer for the first time without any knowledge of the tax system can be very confusing, we recommend NANNY TAX who will deal with all these complex issues for you. Parents often agree a net figure (i.e. what the nanny takes home as salary). However, as an employer, you must pay taxes on top of the nanny's wage. A nanny's gross salary, P.A.Y.E . Tax and National Insurance contributions must be calculated and paid to HMRC on a quarterly basis by the employer. Although many employers tend to look on this as an additional cost, it is actually part of the nanny's gross wage.

For further guidance on tax and National Insurance matters please visit the Inland Revenue Website.

Childcare vouchers

Childcare vouchers are one of the ways in which employers can help their employees with the cost of childcare. From April 2005 the first £50 per week in childcare vouchers supplied by the employer will be exempt from both Tax and National Insurance (NI) contributions for employees, but vouchers supplied in excess of £50-00p will be taxable and liable for NI contributions for the excess. Check with your employer whether they are registered with a childcare voucher scheme.

To be approved for the voucher scheme your nanny must be registered under the childcare section of Ofsted.