Nanny Payroll For Parents
Get Your Nanny Payroll Right the First Time with Expert Support
5 Easy steps to get your nanny payroll just right
Step 1
Agree how much
Step 2
Set up a contract
Step 3
Uderstand duties
Step 4
Finalise payroll
Step 5
Set up payments
Agree how much you want to pay your nanny
The amount you decide to pay will depend on many factors, such as experience, qualifications, availability and geographical location.
If you are unsure what to offer, ask your local nanny agency. Tinies Childcare will have a branch near you, and will be happy to give you free advice about going rates and availability in general.
Do make sure you agree a gross rate, not a net rate. Gross Pay is the amount before deductions, and Net Pay is the amount of pay the nanny actually takes home. That may seem obvious, but in some parts of the country, some nannies make the mistake of requesting a particular net pay.
If you agree that net rate, either you or the nanny could lose out significantly. Here’s why:
- A net rate means that the employer pays the tax and NI on top, no matter how high it might be. That means the employer could end up paying tax that arises from a previous year, before the nanny started. That’s why no business would ever agree a net rate.
- A net rate means that the nanny misses out on any tax refunds, e.g. due to a period of lower earnings or a gap between jobs. That’s just not fair.
- A net rate means that the nanny misses out on any increase in the personal tax-free allowance. The cumulative effect of this is that ‘net pay’ nannies can lose out on significant amounts over time. That’s not fair either.
Always negotiate a gross rate, and we’ll explain how much your nanny should take home net (or you can use our calculator).
In a hurry? Register now and we will get things moving the next working day.
Why a written contract is important
Having a written contract of employment in place is a legal requirement, no matter how informal the relationship feels. A good contract will ensure both parties know what is expected, preventing misunderstandings at a later date.
The document has to be given to the nanny on or before their start date. We provide our standard contract at no extra charge. Just register your details and we will send this across to you within one working day. Our employment advice is unlimited, and all this is included in our annual subscription.
In a hurry? Register now and we will get things moving the next working day.
Your responsibilities as an employer
Our job is to help make sure you meet your legal responsibilities as an employer and your contractual responsibilities to your nanny.
HMRC need you to register as an employer as soon as your nanny starts, make monthly deductions from the pay and submit copy payslip information on or before each pay day. We do all this for you. You must pay over the tax and NI deducted, along with Employer’s NI, either once a month or once a quarter. We’ll tell you exactly what to pay and when to pay it. Your nanny has various employment rights, such as paid holidays and the right to be paid the National Minimum Wage. We’ll explain all these and guide you through.
Auto-enrolment pension legislation will also impact, normally requiring an employee letter after the first payday and a pension scheme within 3 months. Read more about pensions here.
Last, but not least, your nanny has to be paid correctly, paid on time, and given a payslip. We’ll make sure this happens every time.
In a hurry? Register now and we will get things moving the next working day.
Choosing a payroll provider
All good nanny payroll companies will provide you with payslips and tell you how much to pay HMRC, but many hit you with additional charges further down the line. Make sure you know what you are paying for before you sign up.
Watch out too for those that try to sell you add-ons that you simply don’t need, such as extra insurance. In most cases, your household insurer will provide you with adequate cover at no additional cost, so try there first.
We have a single annual subscription for our monthly payroll charged at £260 pa, with no additional or hidden costs, regardless of how many nannies you pay during that period.
If your nanny is paid over £10,000 pa, they will at some point need to be enrolled into a pension scheme, so you should know how your payroll service will deal with this. Most require you to set up the pension yourself, with little or no choice of pension providers, and then charge you for administering it. NannyMatters solutions are far more helpful:
- You can choose any pension provider you like, deal with them direct, and we won’t charge you anything for calculating and deducting the pension contributions
- Or, you can choose our fully-managed pension service, for £60 pa, and we will set up a NEST pension scheme for you, and deal with every aspect of it including the scheme set up.
We don't charge extra for
- Paying a second employee alongside, or paying a temp when covering sick or maternity leave.
- Setting up or closing down your PAYE scheme.
- Claiming tax refunds, or funding for SMP.
- Backdated payroll problems.
We do charge extra for
- Weekly payroll, an additional £50 pa, and there is a very good reason for that: we want to discourage you from paying your nanny weekly because of the extra work created for you and for us, with much tighter deadlines for notifying HMRC if anything changes. Very few people are paid weekly nowadays; monthly pay is best practice. If you want weekly, we can do it, but do try to persuade your nanny to accept monthly pay instead. We can help by working out advances or loans to avoid any hardship issues.
- Our optional pension management service, £60 pa
Setting up payments
Paying your nanny on time is a fundamental responsibility. We can help you find the best method for you and your nanny.
Monthly Pay
Paying monthly, in arrears, is the simplest and most common approach. You can pay 1/12th of your nanny’s annual salary each month, or base it on actual hours worked. Our experts will help you decide the best setup for your arrangement, including term-time or irregular hours, and handle all the calculations for you.
Pay Day
We recommend choosing a clear, consistent payday — usually the last working day of the month or a fixed date such as the 28th. Setting a regular schedule keeps things simple for both you and your nanny.
Transferring the Net Pay
We’ll confirm the exact amount to pay your nanny so you can transfer it directly from your account. You stay in full control of your bank account at all times. Once payments settle into a routine, you can set up a standing order, and we’ll make any adjustments when needed.
Cash in Hand
It’s legal to pay in cash if it’s processed through payroll, but unreported ‘cash in hand’ payments are not allowed. Paying or accepting cash without declaring it to HMRC is against the law. Contact us for confidential advice if you’re unsure about your current setup.
Tax-Free Childcare
If your nanny is registered with the correct authority, you can use your tax-free childcare account to pay both your nanny and HMRC. It’s a convenient, compliant way to manage payments. Ask us for our free helpsheet for step-by-step guidance.
Get in touch with us
Office and New Enquiries
(Monday to Friday 9am to 5pm)
(Allow next working day for a response)
West End House
Blackfriars Road
Nailsea
Bristol
BS48 4DJ
