Nanny Payroll Service
How do I set up a payslip and begin paying taxes for my nanny or housekeeper?
It is essential to consider that when you decide to hire a nanny, housekeeper or any domestic staff, a group of obligations will come with this action. One of these obligations is to provide your employee with a regular payslip. Unfortunately, many families won’t know where to start the process, or won’t know that they have certain obligations by law when they hire private domestic staff.
The process of hiring a nanny or housekeeper will involve more than just the contract and wages; it requires a regular payslip; a document that needs to be provided by the employer on or before the payday, which will contain how much wage has been earned on a weekly/monthly or fortnightly basis.
The payslip needs to show all the deductions or bonuses of the employee’s salary, personal subscription, pension, the employee’s national insurance contribution, PAYE tax and the number of hours worked. The payslip is proof of employment and that the nanny or household member is up to date with their tax payments.
How Do You Start Producing a Payslip and Begin Paying Taxes for Your Nanny?
The family would need a set of documents first. Initially, the nanny or housekeeper must provide a P45 form (from the current tax year) from the family or last employer for whom they last worked. This document will give a background check regarding the domestic staff’s tax paid to date, including the amount deducted and the tax code when they left their last job.
If a P45 is not available, the nanny or housekeeper could complete a new starter form and fill in all the necessary details. Once all the data is gathered, the employer must report the wage and deductions to HMRC for complete, transparent regulatory matters.
What does your Payslip contain?
- Payslip primarily contains the nanny’s or housekeeper’s information — Name, NI number, tax code, date of payment.
- The nanny’s net wage/salary
- National Insurance contribution per payslip and pension contribution
- Any other legal deduction that the nanny and the employer have agreed upon
- The total amount of deduction
- The total amount of wage that the nanny will receive
- Tax reference
- Summary update on the nanny’s contribution
What should I do after the Payment?
Another essential step after the payslip and payment of the nanny is the Full Payment Submission (FPS), which reports the payment to HMRC and any additional expenses or deductions made. The payslip must be submitted on or before your expected payday date, regardless of when you paid the nanny or housekeeper.
What are the possible deductions from my nanny’s or housekeeper’s salary?
Aside from the nanny’s or housekeeper’s obligatory contributions and tax, the employer is allowed to deduct the following:
- if it’s something the nanny or housekeeper broke and the contract says they’re liable for it, for example, a broken antique, house decor or appliance
- If the nanny applied for a loan
- if the nanny asked for a wage advance (whatever the use may be)
- accommodation charges, like rent, electrical bills, gas, laundry — depending on the job that the nanny applied for. If the nanny is hired in a live-in position, the family will need to include the accommodation in the contract.
- Late, absences and leaves.
Additional payments could also be included in the nanny’s payslip. This could contain:
- work-related reimbursable expenses, like taxi fare, food expenses or the likes of such
- salary increase or incentives
- additional fee when and if the employer made a special arrangement that isn’t written in the contract, such as overtime fees
- Holiday pay, unless the employer pays it in advance
- Extra payment when travelling, again depending on the contract with the employer
- Medical or maternity suspension payments
- Bonuses, either quarterly or annually
What Should a Nanny or Housekeeper Do?
Before working for a particular family, the nanny or housekeeper should make sure that they are registered as an employer with HMRC with a PAYE scheme system. This will secure their tax payments and contributions so that everything is done legally and in writing. The PAYE scheme will also track the nanny or housekeeper record, which you could check in case needed, although keeping a copy of all the payslips for your personal records wouldn’t hurt.
The payslip contains possible information, like their tax amount, national insurance contribution and tax code to help identify your data in the system.
How Do I Pay Taxes for my Nanny or Housekeeper?
Every person working in the UK has the requirement to pay taxes and is obligated to declare this to the pertinent authorities. Any household or private domestic staff is obliged to report and pay taxes.
How do I declare this? This is done through the Pay As You Earn (PAYE) scheme, which will be operated by the employer or generated through an agency payroll system. If you are looking for an agency to do this work for you, Little Ones Payroll will gladly take care of everything involved with a payslip.
Little Ones Payroll will calculate the tax bill and the employee’s national insurance contribution after sending this information to the employer, providing the payment instructions and bank details of HMRC. Our team of experts will assist the family by giving a copy payslip with all the information mentioned above.
Do I Need to Pay My Nanny’s or Housekeeper’s Tax?
Yes. When an employer doesn’t pay their employee’s tax or does not pay the correct amount, it is considered a criminal offence. Therefore, employees must be sure to discuss this arrangement with their employers. Unfortunately, some of them fail to do so and assume that their employers are taking charge of their taxes, only to end up having legal problems upon learning otherwise. When tax is not paid, both employers and employees will face the following damages:
- Tax and National Insurance Contribution payment plus interest to HMRC
- Additional fine and lack of Real-Time Information (RTI), which aims to improve how employers submit PAYE to HMRC
- Investigation with possible legal charges, prosecution and imprisonment
Many families in London & England will choose to use a payroll service to avoid missing any essential steps in their domestic staff payslip and tax declaration.
What if I’m Late in Paying PAYE and National Insurance?
Of course, every legal and government-related matter should be addressed on time to avoid unwanted penalties. HRMC is reported to charge a fine to employers who don’t pay their nanny’s or housekeeper’s PAYE amount and National insurance contribution in full and on time. The first instance of late payment is let off, but the second to third instance would result in 1% added to the late amount in the relevant tax month. Daily interest will pile up and will be added to the unpaid amount.
Paying less than the supposed amount is also considered a late payment. There will be an additional penalty of 5% of the unpaid amount if the employer is still negligent after six months; a further penalty of 5% if the employer has not paid after 12 months.
Consequently, the employer will receive a notice as a summary of what they owe, how to pay and what to do otherwise, since there may also be other discrepancies, like an incorrect date on the returns. In addition, death, fire or other natural disasters, ill health, technology difficulty or incapacity, theft or crime could also be cases that HMRC will accept.
Settling this will definitely be an inconvenience. However, this is why Little Ones Payroll and their team of professional employees make sure you never have to encounter this kind of problem.
Why Work with Little Ones Payroll?
All the trouble of doing these mandatory requirements is easy if you put them all in the hands of qualified individuals. Little Ones Payroll is just the right company for that, as the leader of Nanny Payroll Services with more than 15 years of experience in the market.
Little Ones Payroll isn’t just a Payroll established; together with Little Ones Agency, they are a growing childcare and housekeeper provider. This company is led by a team of experts who assist clients in the most extensive way.
Initially, suppose the family registers as a client looking to hire a nanny or housekeeper through us. In that case, they will get a complimentary six months of free payroll services from the date your nanny or housekeeper’s starts. This means that the company will be in charge of generating payslips and the complete payroll service. This includes:
- Registering you as an employer
- Setting up a PAYE scheme
- Generating weekly or monthly payslips
- Tracking your nanny’s Insurance contribution and Income Tax and providing instructions on how to pay these
- Assisting with filing your annual tax return
- Handling the complete payroll record
- Access to our HR services
- Support for any work-related queries, including maternity and sickness
With the Little Ones Payroll excellence and commitment, the team pride itself on delicately aligning a premium, luxury service to those who put their trust in them. Please call the Little Ones Nanny Payroll team for more information on 020 7183 6795.