Tax & National Insurance
Each employee working in the UK must pay their tax and National Insurance (NI). This rule applies even for the employee who works part-time and temporarily. This payment will be taken care of by the employer who deducts the Tax and NI from the employee’s Gross Salary before their Net Salary. The working people need to pay taxes and insurance. The Nanny PAYE Scheme by Little Ones helps both the families and their nannies.
Nanny PAYE Scheme by Little Ones
PAYE is nothing but the Pay As You Earn Scheme. Every employer should be a part of the PAYE Scheme. The HMRC system which obtains NI and Income Tax from the employment payslip is known as PAYE. Every employee should provide cash wisely to the government via this PAYE Scheme. An employer is the one who decides the payment to deduct from the employees to send the PAYI and NI via HMRC. This process must happen before the employee receives their salary.
The nannies must examine their employers whether they register in the Nanny PAYE Scheme or not. After the setup process, there should be details of Tax and NI rates to HMRC in their payslips. The PAYE Scheme reference number should be displayed along with the pension contribution if provided.
Disadvantage of Paying by Cash
Paying by cash monthly can look like an easy way at the starting point, but it is an unsettling process. This process is risky as it may result in long-term problems. The nannies will suffer the loss of their rights such as sick pay, maternity pay, holiday pay, etc. There will also be a reduction in not maintaining NI records for HMRC, which leads to the loss of pension payment.
The nannies cannot apply for a loan because the loan providers will need proof of earning like the last 5 to 6 payslips. The employers may end up paying increasing-fine for HMRC and for not proclaiming proper tax.
Consequence of not paying Tax
If the employer and the nanny do not pay the Tax and NI properly for the HMRC, they both will face significant consequences and heavy penalties to pay. If the higher authorities find out about these malpractices, it may lead both the employer and the employee in big trouble.
They include,
To pay the TAX and NI to HMRC along with the interest
To pay the penalty for lack of paying the taxes
Not paying tax may consider as illegal that leads to investigation and custody
Little Ones provide you with all the facilities to avoid getting a penalty. We also help both the employers and the caretakers to obtain all the employment rights. We also make sure that the payslips reach the nannies without fail. To know about more facilities provided by us, you can visit Little Ones Payroll and HR.
If you need other information regarding the Tax and NI, kindly call us on 0XXX XXX XXXX.
New to Employing a Nanny ?
Once you have found your nanny, there are a few things that you will need to do prior to them starting with you.
We have highlighted these key steps below for you.
Verify that your nanny is legally permitted to work in the UK
Simply check an ID document (e.g. passport or visa.)
Calculate your overall cost by agreeing on a gross salary.
Your total cost will include your nanny’s gross wage, employer’s NI, and any pension contributions. You can use our Gross to Net Salary Calculator to work this out.
Make sure you have a Employment contract in place.
We will create a bespoke contract for you as part of our service.
HMRC requires you to register as an employer.
We will do this for you as part of our service.