Live-In Nanny Payroll UK
Live-In Nanny Payroll Made Simple for UK Families
How live-in nanny payroll differs from live-out
The fundamental rules are the same: when you employ a live-in nanny, you become their employer and you are responsible for PAYE, income tax, National Insurance, and monthly payroll submissions to HMRC. But a live-in arrangement introduces two complications that parents often do not anticipate: the accommodation offset and sleep-in pay.
The accommodation offset allows you to count a portion of the value of the accommodation you provide against the National Minimum Wage calculation. HMRC sets a daily rate for this offset, which changes each tax year. Getting this wrong is one of the most common payroll mistakes made by families employing a live-in nanny, and it can result in an underpayment of wages that exposes you to HMRC penalties.
Sleep-in shifts – where your nanny is required to stay on the premises and be available overnight but is not actively working – are also calculated differently to standard working hours. The rules around sleep-in pay have been subject to legal challenges in recent years and the position is nuanced. We make sure your live-in nanny payroll accounts for all of this correctly from the start.
What does live-in nanny payroll cost?
Payroll costs for a live-in nanny include your annual payroll service fee, employer National Insurance contributions, and pension contributions if applicable. You need to factor all of these into your budgeting before your nanny starts.
Employer’s National Insurance is charged at 15% on earnings above the secondary threshold (currently £5,000 per year). This is on top of your nanny’s gross salary and is paid directly to HMRC each month. It is not deducted from your nanny’s pay – it is an additional cost to you as the employer.
If your live-in nanny earns over £10,000 per year and is between 22 and State Pension age, you will also need to auto-enrol them into a workplace pension within three months of them starting. Both you and your nanny make contributions. We factor all of this into the illustrations we provide at registration so you know your full monthly cost before you commit.
Our payroll service starts from £260 per year. Use our free nanny pay calculator on the homepage to get an instant estimate of take-home pay and employer costs for your live-in nanny.
What our live-in nanny payroll service includes
Everything you need to employ a live-in nanny correctly, from initial HMRC registration through to monthly payslips and ongoing compliance.
Our annual subscription starts from £260 and covers:
- HMRC employer registration and PAYE scheme setup
- Monthly payroll calculations including the accommodation offset
- Payslips issued to your nanny on or before each payday
- RTI submissions to HMRC on your behalf
- Guidance on sleep-in pay and National Minimum Wage compliance
- Advice on sick pay, maternity pay, and holiday entitlement
- Pension auto-enrolment management (from £60/yr as an optional add-on)
- Unlimited advice from our payroll team
You do not need to speak to HMRC, work out any calculations, or figure out what to submit and when. We handle all of it and tell you exactly what to pay and when to pay it.
The accommodation offset and National Minimum Wage
This is the area where most families make mistakes with live-in nanny payroll, and getting it wrong can be costly.
If you provide accommodation to your live-in nanny, you are allowed to count a set daily rate against the National Minimum Wage calculation. For 2025/26 this is £10.66 per day. This means you can reduce the gross salary you pay by up to £10.66 per day the nanny lives on your premises, without it counting as an underpayment of the National Minimum Wage.
However, the offset cannot take the effective hourly rate below the National Minimum Wage, and it can only be applied to days where accommodation is genuinely provided. If you have a live-in nanny who goes home at weekends, the offset only applies on the days they are on your premises.
We calculate the offset correctly for your specific arrangement and apply it to the payroll each month. If your situation changes – for example your nanny begins going home at weekends when they previously stayed – we adjust the calculation straightaway.
Can a live-in nanny be self-employed?
No. In almost all circumstances a live-in nanny cannot be classed as self-employed, and attempting to treat them that way is a serious risk for both parties.
HMRC is clear that someone who works regular hours in your home, follows your direction, and uses your equipment is an employee. This applies whether they live in or live out. Treating a live-in nanny as self-employed to avoid payroll and employer National Insurance is not a legitimate arrangement. If HMRC investigates, you could be liable for unpaid tax and NI contributions going back years, plus penalties on top.
If you are currently in an arrangement that you are unsure about, get in touch. We can advise you confidentially on how to get things onto a proper footing without unnecessary disruption.
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
