If you are in the role of a nanny tax being self-employed, you are normally known as the nanny or the childminder in the UK. You must be wondering about your tax returns and what exactly you owe to HMRC as a nanny. In case of being the guardian or the parents are looking to have the services of a nanny to take care of the children, you are also required to get aware of the rules of HMRC regarding tax returns and relevant matters. Most importantly tax liability is the main thing to be taken care of. This comprehensive article is designed to cover the tax facts about working as a many and hiring a nanny for your children. Let us get further in the discussion to learn more.

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What is the Nanny Tax for Childminders?

Whether you are in the role of a childminder or self-employed nanny, you will have to declare the number of your earnings to HMRC. This is possible to do while you are doing your tax returns. This is also known as a process of submitting the earnings and expenses that are occurring in the period of one tax year. 31st January is supposed to be the deadline for submitting the tax returns. You will have to declare whatever you have earned during the period of 6th April to 5th April in the last year. Many people wonder how much they owe to HMRC and it totally depends on the amount you are earning within one tax year. Generally, you will have to pay income tax and national insurance.

What Do I Earn not to File a Tax Return?

You must have a basic understanding of personal allowance to know better about earnings that do not require tax returns. Well, basically the tax-free portion of someone’s income is known to be the personal allowance. If you are an individual who is earning less than the figure £100,000 within the duration of a year, you will be entitled to a personal allowance. The figure of £12,570 from your income is considered as the personal allowance in the tax year 2023-24. If your earning is lesser than this limit in a tax year, you are not liable to pay the tax, however, you will still have to pay the national insurance. In case of earning less than the limit mentioned earlier, you will have to file tax returns. This is because of the fact that HMRC will still require to know what are you earning and through what means.

Nanny Tax for Parents and Guardians

If you are looking for a nanny to take care of your children, you must be aware of the employment status before hiring a nanny. Nannies can be full-time workers or part-time workers as well. There can be self-employed nannies as well who are offering the services alongside the main job. This makes it very imperative to be sure about the employment status of a nanny before deciding to hire. Otherwise, you can end up paying the nanny tax being in the role of an employer. So before you agree on terms with a nanny for your children, learn about their employment status to avoid paying an extra amount as the liability of nanny tax will be imposed on you in case they are self-employed and you have hired them for their nanny services.

What Would I Pay?

There are certain things that you must be considerate about before you finally hire a nanny or childminder for your children. This is important because they will be working and associated with your home and kids. This includes the PAYE taxes, pension of the workplace, redundancy, pay of maternity leave, pay of statutory sick leave, and the pay of other holidays. If you do not take care of these matters before hiring the nanny, you will end up paying more than you actually should.

How Do I Know my Nanny’s Employment Status?

The best is to find out the employment status of your nanny before you finally decide to start working together for your children. There can be extremes in different cases, however, the possible cases are discussed below.

In the first possible scenario, your nanny will be self-employed. The nanny will agree to work with you on different days of the week in this case. They also have the ability to accept the works you give or decline it just according to their suitability.

In the second case, the nanny is employed. Who can be working full time means 40 hours in the duration of a week. Or the nanny is working part-time which means 20 hours in the duration of a week. This will be based on fixed terms. You will have to decide the working hours and they will have to request time off. They will not be free to make such a decision of declining the work from you.

I’m an Employer. What Next?

Many of you must be wondering how to handle the nanny being in the role of an employer. What you need forts to do is to ensure that your nanny has the work permit to offer services in the UK. You will also need to get employer liability insurance in this case. You will have to ensure employee registration. The payroll should also be set up and you will pay the statutory benefits to the nanny. This will also make you deduct the national insurance and income tax from the salary of the nanny.

The Bottom Line

Now that you have gathered a fair amount of information about the ins and outs of the nanny tax in the UK, we can bring the discussion towards wrapping up. There are certain imperative facts that everyone must consider before finalising the work with a nanny that is self-employed or employed. This will keep you protected from paying any extra amount in the form of nanny tax in the future. We hope these few minutes of reading will help you develop a better understanding of the ins and outs of the nanny tax.

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Disclaimer: The information about the ins and outs of nanny tax provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.