Nanny Employer Tax Rates And Thresholds 2026/27

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. If you employ a nanny, a handful of rates and thresholds decide what you and your nanny pay each month. Here they all are in one place, with a plain English note on what each one means for a household employer.

Employer National Insurance

As the employer, you pay National Insurance on top of your nanny’s gross pay. For 2026/27 the rate is 15% on earnings above £96 a week (£417 a month, or £5,000 a year).

This is the figure that catches most families out. The rate rose from 13.8% and the threshold dropped from £9,100 to £5,000 in April 2025, so the bill is noticeably higher than it used to be. Our post on why recent National Insurance changes are catching nanny employers off guard explains the impact in more detail.

Households employing a nanny generally can’t claim the Employment Allowance, which reduces the employer National Insurance bill for businesses, so the full 15% applies.

Employee National Insurance and income tax

Your nanny pays employee National Insurance of 8% on earnings between £242 and £967 a week (£12,570 to £50,270 a year), and 2% on anything above that.

For income tax in England, Wales and Northern Ireland, the personal allowance is £12,570. After that, the basic rate is 20% up to £50,270 and the higher rate is 40% up to £125,140. Scottish income tax bands are different and depend on where your nanny lives.

You don’t work any of this out yourself. It’s deducted through payroll and paid to HMRC as part of your regular bill. If you’re not sure how that payment works, see our guide on how to pay HMRC.

National Minimum Wage and National Living Wage

From April 2026, the rates are £12.71 an hour for workers aged 21 and over, £10.85 for 18 to 20 year olds, and £8.00 for under-18s. Your nanny’s average hourly rate across their paid hours must never fall below the rate for their age. Our guide to paying the National Minimum Wage and Living Wage covers how to check this.

Pension auto-enrolment

If your nanny is aged 22 or over, under State Pension age and earns more than £10,000 a year, you need to enrol them in a workplace pension. The minimum contribution is 8% of qualifying earnings, of which you pay at least 3%.

You’ll also need to repeat the exercise every three years, which is known as re-enrolment. See three year pension re-enrolment and our nanny pensions page for how we handle both.

Mileage and expenses

If your nanny uses their own car for the children, you can pay up to 45p a mile for the first 10,000 business miles a year without any tax or National Insurance, and 25p a mile after that. Journeys from home to work don’t count, and you’ll need a record of each trip. Our post on paying your nanny’s expenses and mileage shows how to keep it simple.

Holiday entitlement

This hasn’t changed: nannies are entitled to 5.6 weeks of paid holiday a year, pro rata for part-time hours. Our guide to nannies and holidays explains how bank holidays fit in.

What this looks like in pounds

As an illustration, take a nanny on £25,000 gross a year with a standard tax code and no pension:

• Employer National Insurance: 15% of (£25,000 minus £5,000) = £3,000
• Employee National Insurance: 8% of (£25,000 minus £12,570) = £994.40
• Income tax: 20% of (£25,000 minus £12,570) = £2,486
• Take-home pay: £25,000 minus £994.40 and £2,486 = £21,519.60
• Total cost to you: £25,000 plus £3,000 = £28,000, before pension

Try your own numbers with our free nanny gross to net calculator. And whatever you do, agree your nanny’s pay as a gross figure, not net. Our post on why you should agree a gross pay rate instead of net explains why it protects both of you.

Nanny tax rates 2026/27: quick answers

What is the employer National Insurance rate for a nanny in 2026/27?

15% on earnings above £96 a week (£5,000 a year). The first £5,000 of annual earnings carries no employer National Insurance.

Do I pay employer National Insurance on my nanny’s whole wage?

No, only on the part above the secondary threshold of £96 a week.

Can I claim Employment Allowance for my nanny?

Generally no. The allowance is aimed at businesses, and employing someone for household or domestic work usually doesn’t qualify.

What is the minimum wage for a nanny in 2026/27?

£12.71 an hour if they are 21 or over, £10.85 if they are 18 to 20, and £8.00 if they are under 18.

Do tax rates change if my nanny lives in Scotland?

Income tax bands can differ depending on where your nanny lives. National Insurance rates are the same across the UK.

Let us keep track of the rates for you

Rates and thresholds change every April, and getting one wrong means a bill from HMRC later. We update everything for you, run your monthly payroll and tell you exactly what to pay. Already have a provider and think you’re paying too much? Read about switching nanny payroll provider.

Register Now