Thursday , November 16 2017

The Benefits of Paying Your Nanny A Gross Salary

There can be a lot of confusion when it comes to employing a nanny. Can they really be self employed? Can I pay them cash in hand? Do I have to pay them a pension?

 

So let’s cover the basics. If you are employing a nanny, who works solely for you or one other family, you have to employ them. This means providing them with payslips, and ensuring you meet the HMRC’s criteria which includes having employer’s liability insurance and registering as an employer to set up payroll – no cash in hand. Paying your nanny is best done in gross terms, not net.

 

The Go Gross Campaign aims to educate nannies, parents and agencies as to why paying gross wages needs to become the norm in the nanny world. First, let’s be clear. Net is the nanny’s take home wage, the amount of money which actually goes into their bank account. Gross is the amount before any reductions such as income tax, national insurance contributions and student loans.

 

Unfortunately at the moment many agencies still advertise their jobs in net. This has the knock on effect of making nannies presume this is the way it should be, and their employers too. However there are many benefits to paying nannies gross instead of net.

 

For a start, it would level the playing field. With every other industry talking in gross terms, it allows nannies to compare their wages to that of others. It would also make it easier to compare nanny jobs themselves, rather than some being net and some gross. As an employer, it’s easier to see the going rate for nannies and how much they realistically cost.

 

 

Gross wage encourages job stability as you know exactly how much you are paying your nanny each month. With net wages adding on tax and national insurance, you can easily forget about the added expenses of having a nanny which may result in having to let them go. You will also be liable for paying off any student loans or unpaid tax from previous jobs. With gross pay, the wage you agree is what you pay.

 

Nannies are entitled to a pension from 2018 with many already being staged in. Nanny employers paying net wages will end up paying both their 1% contribution and their nannies 0.8% (increasing to 3% and 4% respectively from April 2019). That’s a potential 7% increase on the cost to the employer. Whereas employers paying gross wages will just contribute their 1-3% on top of the gross wage.

 

Each year the tax free allowance increases, when paying net, the employer is seeing the benefit. With gross pay, it is the nanny receiving the extra in their pay. This means each year they get a slight pay increase despite the employer paying the same gross wage. At no extra cost to you, your nanny benefits.

 

Finally, gross wages help your nanny when it comes to applying for mortgages and loans as the bank will want to know their gross wage. The same applies to employers when asked for evidence on how much they spend on childcare.

 

Written by Emma George who is a professional nanny and one of the minds behind The Nanny Lounge. which you can learn more about by visiting this website. http://thenannylounge.co.uk 

About Estate & Manor

Estate & Manor is an online magazine portal which is dedicated to global VIP staffing. Estate & Manor offers readers a glorious insight into the world of working with affluent individuals – All of our contributors are known for their expertise and knowledge in their given industry niche. These areas consist of: Estate Management, Lifestyle Management, Yacht and Jet Crew, Childcare and Education plus many more.

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