Nanny pay - gross or net?

[devsdev]

Hi all,

We have agreed a net hourly rate with our nanny as that made sense in terms of understanding current rates etc, however as I am setting up payroll I've read about gross pay being the new trend because of new HMRC rules. Does anyone have any further insight into this? Are the potential cost differentials in the 10s, 100s or 1000s? I don't want to go back on our original agreement obviously, but equally want to have a better understanding of the financials.

This was the posting I read: http://www.payefornannies.co.uk/parents/net_vs_gross.htm

Any insight appreciated

Dev

[RichJ]

Hi,

We have just been through the same process. I think the issue is not so much an quantifiable figure but more that if you agree a net wage you are effectively guaranteeing the nanny a certain amount, whatever her personal tax affairs, and you therefore bear those risks. For example, if she had issues with tax from a previous year, you could ultimately pick up those costs. Similarly, if tax or NI went up, you would bear this cost. With a gross wage, that would be her risk. We had an informal agreement on a net wage but did agree to put a gross wage into the contract. If you didn't want to re-trade your agreement, you could put a net wage in the contract but add wording that it is conditional upon a certain personal tax code, no unpaid tax from previous years, no other part time jobs etc.

Good luck with it all.