Nanny Share is when two or more families employ a nanny to look after their children.
View our guide to a successful share written by Theresa Byrne of thenannysharers.co.uk here
It is advisable for each family to set up a separate PAYE scheme and agree a gross salary. This will result in a considerable saving in National Insurance Contributions (NICs) for each party.
Options Available :-
- All Families set up a separate PAYE scheme. This saves on National Insurance Contributions (NICs) for each party. The families agree a fair split based on gross salaries. Please note that net salaries need converting to gross salaries based on the standard tax allowance and the basic rate allowance for the split to be correct.
One family then applies the standard tax allowance and the others apply the basic rate allowance. The family that operates the standard tax allowance will pay the more net pay to the nanny and less to HMRC. The families that operate the basic rate will pay less net pay to the nanny and more to HMRC. The cost calculates to the same for each family. If the nanny works for one family on a different rate or more hours the split can be calculated accordingly. If you would like Way2paye to calculate the split for you please do not hesitate to contact us.
- One family takes control and splits the costs. Please note that this is not always the cheapest option as the National Insurance is higher on higher earnings. It is not advisable if the families are not familiar with each other.
- The Nanny requests a split tax code from the local tax office. The Nanny must explain to the tax office that they work for two or more families and that a net salary has been agreed. This can take several months to arrange and not all tax offices are happy to do this.