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All about the Nanny Tax Service

If you employ a nanny and pay the minimum wage or above you are required by law to organise the nannyís income tax and National Insurance.

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†As an employer of a nanny you must pay their National Insurance Contributions (NICís) as like any other employee a Nanny should be entitled to maternity pay and unemployment pay, and will only be able to apply for these if they have been making National Insurance contributions.† As the employer of a Nanny you must deduct NICís from their pay each week.

You will also have to make your own contributions to National Insurance through Employers NIC and these are generally slightly less than the National Insurance Contribution that your nanny will have to pay.† To make these contributions you will need to know the difference between gross and net pay.† Gross pay is the amount before any taxes or NIC have been deducted and net pay is the amount after all taxes and NIC have been deducted.† You need to make sure you know exactly what the take home pay is and also be aware of everything that needs to be deducted and why.

For many of us that lead busy lives having a nanny can be a real life saver and can provide you with more free time in what could otherwise be a hectic schedule.† Unfortunately this benefit can be overshadowed by the fact you could end up spending your free time sorting out the nannyís payroll.† The world of salaries, tax, sick pay and overtime can be stressful and take up a lot of the time you would rather be spending with your family.† Instead of spending your precious time learning how to do payroll there are now firms out there that provide you with a full nanny tax service.

A nanny tax service will save you from the stresses and hassles of running your nannyís payroll and also dealing with the Inland Revenue.† A company providing a nanny tax service will take care of all the complex legislation and will also ensure that you are fully compliant.† A nanny tax service company should register you with HMRC and open your PAYE scheme on your behalf.† They will act as your agent to ensure that all your obligations as an employer are met.† They will also provide your nanny with a payslip on the correct date, showing their gross wage, tax, NI deductions and the net wage.† A good company will also provide you with a P45 if and when your nanny leaves.†

All you should need to do is provide the nanny tax service company with the hours your nanny works each week, inform the company if the nanny is off sick or falls pregnant and finally make sure you pay your nanny and the HMRC on the dates they money is due.

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