Reply to: Employing a nanny

[TheFaQQer]

With your luck, the creche will go bankrupt, somehow owing you money!!

I've asked my accountant and see what he says...

Here's what my accountant said:

From your email I understand that the nanny is being employed at your friend's home/workplace and the Limited company pays £30 per day to the nanny for care of the child.

If your friend thought that this would not be a benefit in kind assessable on her, then unfortunately I think that she is incorrect.

Although the "Nursery" is provided by the employer who makes premises available the tax exemption will only apply if the facilities comply with legal requirements for local authority registration and cannot be provided on premises that are mainly used as a private dwelling.

The Company can continue to employ the nanny however the employee will be taxed on the salary and employer's National Insurance paid by the Company.

However if the employer was to make childcare vouchers available of up to £55 per week to its employees and the nanny was a person approved to care for the child by the relevant authority then the first £55 of the £150 per week of the nanny's salary would be exempt from tax and NI.

[WindyAnna]

What does Mr Windy Anna think.

Mr WindyAnna has seen the au pair who lives round the corner and now he is VERY afraid! She is one scary chick!

[WindyAnna]

Thanks friendlyaccountant - will do the sums and decide what works out best.

[Friendly Accountant]

Not sure about this..

I'm having an internal debat about whether to stay umbrella or go Ltd - both Mr WA and I are inside IR35 so teh debate is not as clear cut as if we weren't. (I have heard all the arguments either way a number of times so not needing to hear them again) but I heard an interesting possibility the other day that could really swing it Ltd - but I don't think it is valid - anyone got any experience ...

I employ my nanny personally as a small employer meaning that apart from the small part I can claim pre-tax in childcare vouchers I am paying her salary (and thus tax) on money I've already been taxed on.

Met a lady who employs her nanny through her Ltd Co. Her argument is that her home is her registered place of work and she operates a workplace creche. She employs her nanny as a "Creche Manager" and states that the creche is available for all employees. she is the only employee and her job requires her to be out on client site 99% of the time. She then places her child in the care of the workplace creche and 'pays' £30 a day for the privilege. Nanny costs are around £30K a year, in excess of £110 a day so this is beneficial.

Does this sound right?

Cheers

Windy

I'm not sure this works, Windy. In order to avoid a benefit in kind in respect of the provision of childcare by an employer, the following provisions must be met:

1. The child has to be yours or maintained by you at your expense / or resident with you.
2. The premises on which the care is provided are not used wholly or mainly as a private dwelling and any applicable registration is met.
3. Those premises are made availalble by the employeer operating the childcare scheme.
4. The childcare scheme is open to all employees.

This scheme obviously falls down on the second of the above criteria. Therefore, HMRC will want to assess tax on the benefit in kind provided by the employer.

Now, you may have an argument here. The question is, "What is the value of the childcare provided". The value of the nanny is obviously £30k per year. However, the benefit of providing a creche probably is close to the £30 per day being paid. If HMRC accept that all you are getting out of the arrangement are creche services, you may be OK. My guess is that they'd argue your getting a nanny and that the BIK needs to be assessed on the £30k per year less what you are paying, which puts another £22k of income in your hands on which PAYE and NI must be paid.

[XLMonkey]

Oh and it costs be about £30K per year to employ her - her gross works out at about £27K - and worth every penny caring for my pride and joy!! She clears about £80 for every day she works.

yozers! my nanny is going to be the mother-in-law - she's looking better value every minute

[Sockpuppet]

Au pairs are much cheaper but younger, unqualified and living with you!!

What does Mr Windy Anna think.

[Diver]

Did you type that with 1 hand?

I typed mine with one hand

You had to be there (in joke)

[Diver]

I can see Next Doors Au pair from where I'm sitting.

Just thought I'd mention that.

I can see next doors old pair from where I'm sitting.
She's eighty and outside pruning the roses

[oracleslave]

I can see Next Doors Au pair from where I'm sitting.

Did you type that with 1 hand?

[NickNick]

"Mummy, does the au pair have a removable bottom?"
"No, dear. Why?"
"Because daddy said he'd like to screw the @rse off her!"

I can see Next Doors Au pair from where I'm sitting.

Just thought I'd mention that.

[TheFaQQer]

Au pairs are much cheaper but younger, unqualified and living with you!!

Mmmmmmmmmmmmmmmmmmmmmmmmm - au pair.

"Mummy, does the au pair have a removable bottom?"
"No, dear. Why?"
"Because daddy said he'd like to screw the @rse off her!"

[WindyAnna]

Oh and it costs be about £30K per year to employ her - her gross works out at about £27K - and worth every penny caring for my pride and joy!! She clears about £80 for every day she works.

It does vary by region though - I live in prime nanny land - highest paid nannies in the country outside of certain mighty wealthy pockets of west London. In Yorkshire it will probably only cost you £20K, in the west midlands about £25K - though it does depend where.

Au pairs are much cheaper but younger, unqualified and living with you!!

[WindyAnna]

I think that you are mixing things up by trying to have a "daytime creche" and referring to child tax credits. It might be simpler to think of it as the limited company simply employing an additional person, rather than a nanny. Provided that the job description is wide enough to encompass a range of activities, why is your nanny not just your personal assistant (which most busy company directors need)?

I'm not really mixing them up - just observing that it sounds better for me than using childcare vouchers.

I'm not sure about employing her as my personal assistant though - mainly because she is a child carer by profession and I need her job description to reflect that! The one I have now probably wouldn't have a problem with it but if she ever left and I needed a new one it could be! Interesting idea though and will certainly consider!

[Ardesco]

That seems reasonable - plus possibly need extra insurance to cover the employees?

I wouldn't employ her. I would have my company outsource child care requirements to her company. I don't want to have to deal with payroll for her and employee rights and all that gubbins!!

[TheFaQQer]

the only spanner in the works that I can think of is that I *think* the creche needs to be a registered/validated/approved/certificated/whatever creche for the childcare vouchers to be applicable. Therefore the creche needs to be inspected or something.

Not 100% sure though.

That seems reasonable - plus possibly need extra insurance to cover the employees?