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You can use the Nannytax salary calculator to work out the net and gross payments, depending on the figures entered. Another excellent calculator is the salary calculator. When your accountant or nanny payroll service provider calculate the payroll for you, your employee and yourself will be sent a payroll slip, allowing you to see the cash payments you should make. You can arrange to pay the salary weekly, fortnightly or monthly, depending on your contract and agreement with your nanny.

Under UK law, you become an employer when you take on a nanny and that brings with it certain responsibilities, one of which is to maintain payroll records for your nanny’s pay. In practice, this means submitting figures to HMRC every pay day and making deductions from pay.

Some nannies will suggest that they pay their own tax and National Insurance. Unfortunately, in 99% of cases this just isn’t an option, since HMRC clearly categorises this type of work as employment, not self-employment. HMRC places the responsibility firmly on you as an employer, regardless of your nanny’s circumstances elsewhere. By law, you must be registered as an employer and make quarterly tax and NI payments.

It’s a very important distinction; an employment situation attracts Employer’s National Insurance, whereas payments to a self-employed person don’t. This means that the taxman loses out considerably when employers treat employees as if they were self-employed. That’s just one of the reasons why HMRC rules are so very strict on the matter.

Very, very rarely a genuine case of self-employment may arise. For example, if a nanny were to specialise in settling newborns and therefore flit from job to job. If you think your case may be exceptional, you must use the employment status indicator tool on the HMRC website to determine the nanny’s true status. The tool is anonymous and provides a useful insight into the difference between employment and self-employment.

For example, a self-employed person will typically (but not always) be paid per job of work, whereas an employee will normally be paid an hourly rate or salary.

For a definitive answer, use HMRC’s Employment Status Indicator tool here: www.hmrc.gov.uk/calcs/esi.htm

You’re not required to include everything, but it’s a good idea to do so. Your nanny’s more likely to take her job seriously if you show that you do. A detailed contract will also help to prevent misunderstandings later on.

For example, if you say, “Feel free to use the car”, your nanny may understand this as, “You can use the car whenever you want”. You may actually mean, “If you need to, you can use the car to transport my child during your working hours”.

Without anything in writing, it would be unfair to caution your nanny for borrowing your car for personal use. It would just be a simple misunderstanding.

Committing these details to paper means you have clear evidence of what you’ve both agreed. This should make employment law easier to enforce if needs be. A good nanny will expect a written contract for similar reasons.

Try to add in the contract anything that’s specific to your nanny’s responsibilities as an employee, and your obligations as an employer. Consider including:

your nanny’s duties
basic ground rules, such as if your nanny can have friends over and your rules on smoking
use of the telephone and other household appliances
use of a family car
date of salary review
family holiday arrangements, such as if you expect your nanny to come with you
length of probation period
payment of petrol money and other expenses
benefits, such as private health insurance or gym memberships
sick leave entitlement and pay
details of disciplinary procedures and any offences that would warrant immediate dismissal
As well as the standard conditions above, think about anything you feel should be obvious. This could be requirements necessary for her to do her job, such as a maintaining a full driving licence. Or it may be simple things such as not swearing around your child.

The more detailed your nanny’s contract is, the less chance there is for misunderstandings.

Yes. By law, you need to provide your nanny with a written statement of employment, usually referred to as a contract. This should ideally be done before she starts work, but definitely within two months of her start date.

A contract is a record of your nanny’s basic working arrangements. You should state the following ..

your name and your nanny’s name
your address and any other place of work, plus any relocation details
accommodation details, if you employ a live-in nanny
job title
start date
end date, where applicable
salary
probationary period and notice periods
hours of work, including details of overtime and anti-social hours
holiday entitlement
pension arrangements
agreements with union or association representatives
what your nanny should do if she has a grievance or complaintIn Northern Ireland, you must also include details of your disciplinary policy.Bear in mind that, from a legal standpoint, a contract is formed as soon as your job offer is accepted. So it is a good idea to get something down in writing as soon as possible.Once you have put the contract together, both you and your nanny must sign it. Make two copies so you can each keep one.