Employing someone in your house (Employing a Nanny)

[Drei]

I went through the forum looking for an answer to my conundrum and only found a post from 2008.

My wife is PAYE and I jump between Inside IR35 and Outside. We have to girls and since we are still working from home, we want to employ a nanny rather than drop them off somewhere where they will probably get sick half the time. The cost for 2 kids in childcare is the same as having a nanny anyhow.

My experience is that the government really doesn't want mums going back to work. If you employ a nanny directly, you become an employer but then pay tax on the salary you have already paid tax on (employer contribution, tax for nanny, pension, insurance etc). This is a cost you can't even deduct from your tax liability, which you can in other countries. So in the end her whole salary will go to pay the nanny, and I might need to chip in too.

Can I setup a new company and employ the nanny from that and deduct it from my LTD? Or run it as a "Creche" which was mentioned in that ooooold post? I am thinking that it might be better not employing the nanny directly in my my LTD just in case but anything is better than the double tax imposed.

I've talked to my accountant and he said there isn't any other way.

I really can't get my head around it, you become so vulnerable, even dismissing your nanny might see you with an unfair dismissal. I would think that the government would be happy if you employed someone and at least not force you pay employer contribution... which is my main issue. The Taxman is going to take a bigger chunk out of my salary than I will since the source (my salary) will be taxed for me, then the nanny will be taxed again and I also have to pay employer contribution.

Surely the people that can afford paying £40k for a nanny are not paying all this nonsense tax.


The only alternative I can see is the missus not working or taking a work break and getting paid from the LTD which doesn't benefit anyone, since her career break is most likely going to make her unemployable in the future. Or employing someone self employed as and "office manager" on the company on a extendable 3 - 6 months contract. I would mention cash in hand too, but that is just as bad, plus all the cash in hand "nannies" (more like glorifies babysitters that came after Brexit and waiting on right of work) we talked to want the same as the fully employed ones))

If you have any suggesting please let me have it.

[Fred Bloggs]

I think the general idea is that if you can afford to pay a nanny for child care, then you do. If you can't afford to pay a nanny for child care, then you don't.

[eek]

It has to come out of your own post income (been there done that).

If you wish to build / buy a creche / nursery - then personally you are totally mad but d000hg may come along later and discuss it - from memory his wife runs one.

[northernladuk]

I've talked to my accountant and he said there isn't any other way.

Not sure we can help if a qualified accountant has given you their professional opinion.

If you employ a nanny directly, you become an employer but then pay tax on the salary you have already paid tax on (employer contribution, tax for nanny, pension, insurance etc). This is a cost you can't even deduct from your tax liability, which you can in other countries. So in the end her whole salary will go to pay the nanny, and I might need to chip in too.

Welcome to the real world.

[Paralytic]

As above, it sucks, but these are the decisions that come your way as soon as you decide to bring those little bundles of joy into the world.

[Bodger]

Well if you can demostrate MOO, RoS, Lack of D&C, you could declare her Outside Ir35 and let her sort her own NIC's / Insurace etc

She might want an uplift in rate though!

*Sarcasm - Before anyone jumps down my throat!*

[WTFH]

If the problem is that you and your wife don't have time for your children, then something has to give.
Either:
1. Learn to live on a reduced income so that you can keep the child rearing within your family,
or
2. Get a nanny in through an agency - you've not specified if this is a 5 day a week/8 hour a day role, or you want a 7 day a week/24 hour per day person
or
3. Take the children to a creche where they can lear to socialise with other children and their bodies can pick up and learn to fight off illnesses
or
4. Adoption.

Remember that the cost in terms of TIME and money to bring up children won't disappear when they start primary school or secondary school. The other problem is that if you are trying to find a tax dodge to do this, then don't complain when your kids don't get the education and healthcare that you think should be provided for them.

[hairymouse]

Has someone mentioned an Au Pair? Could work if you have room in your house for this person to live.

We employed a childminder when our kids were younger, we followed all the rules and it wasn't that burdensome. We tended to hire ones that had their own kids and allowed them to look after their own kids at the same time in our house. This worked out well for everyone and our kids have fond memories of those times.

[SueEllen]

Has someone mentioned an Au Pair? Could work if you have room in your house for this person to live.

Au pairs aren't allowed to work full-time. They are there to pick up the slack in your other childcare/education arrangements.

Also thanks to the "B" they are now very rare and you can only really get US and Canadian au pairs who will definitely know their rights.

Has
We employed a childminder when our kids were younger, we followed all the rules and it wasn't that burdensome. We tended to hire ones that had their own kids and allowed them to look after their own kids at the same time in our house. This worked out well for everyone and our kids have fond memories of those times.

You do not employ a childminder. They are self-employed OFSTED registered childcare workers who work from their own home or premises. If they don't like you or your children they can tell you to F off.

Anyone you are employing like that is either a nanny or a baby sitter who doesn't need to be registered.

[Drei]

Thanks everyone. I wasn't looking for a tax dodge since I paid my tax, I wanted to avoid double tax since it should be illegal. Americans can deduct childcare costs out of their tax return.

I think if I can get a registered nanny I can get £2 for every £8 paid, so that might cover the employer contribution.


Or maybe I should move to Spain or some other country since we are still working remote, at least that way I can save on living cost, enjoy a better life work balance, better quality of life and employ a nanny