How much does childcare cost ?

Advice for parents employing Childcare

How much does childcare costHow much does childcare cost? If you hire childcare to care for your children, you will become an employer. As an employer, you have to meet certain obligations such as paying tax and national insurance, and providing a pension for your nanny.

 

 

Outlined below are the main considerations for you to make a note of when totting up the associated figures:

  1. Recruitment cost (if you’re using our service)
  2. Nanny Salary gross
  3. Additional Responsibilities
  4. Employee’s National Insurance & Tax Contribution
  5. Pension (Employer Contribution) minimum of 3% of monthly salary (subject to change)
  6. Employer’s Liability Insurance
  7. Make sure you’re fulfilling your legal obligations and making payroll filings with HM Revenue & Customs (HMRC)
  8. Other Costs (if applicable): Nanny’s travel costs, associated medical and travel insurance, and provide adequate food and water for every mealtime, unless alternative arrangements are agreed otherwise and set out in the Contract of Employment; AND For live-in positions, the nanny’s property, contents and any other items of value need to be insured for the duration of the nanny’s employment. AND Car insurance and/or parking permit.

 

If you’re thinking about a nanny share, both sets of parents will be employers. This means that although you can share some of the costs, you’ll both have the same legal obligations. It is important to remember that however many families the nanny is working for each will be considered an individual employer and as such have the individual responsibilities, even if all the children are being care for at the same time. It makes things much more straightforward if one family were to leave the share.

Please note that it is not a wise idea for the sake of your children for a nanny to look after more than 3 children under the age 3 years or 4 children over the age of 3 years.

 

Childcare Vouchers

Parents who employ an Ofsted registered nanny can receive some financial contributions towards their childcare costs. There are two types of financial support available: employer-supported childcare vouchers and working tax credits.

If the parent requests that the nanny is Ofsted registered, and especially if it brings a positive financial benefit to the parents, it is increasingly common that the parents pay either partially or in full for Ofsted registration. If the parent does pay for the registration it is considered a benefit in kind and needs to be declared as such.

Working tax credits and childcare vouchers can both be used to pay for the cost of hiring an Ofsted registered nanny, even a shared nanny. Families with a joint income of less than £66,000 per year can currently receive up to 90% towards the cost of hiring an Ofsted registered nanny via tax credits.

 

To use childcare vouchers you must:

  1. Employ an Ofsted registered nanny
  2. Be employed
  3. And your employer must set up/run a childcare voucher scheme.

 

The self-employed are not able to benefit from childcare vouchers at present, but if you are a Director of a company you can, providing you make them available to all your staff as well.

Childcare vouchers can only be used to pay for childcare if both parents use vouchers the family can save about £2000 per year.

For more information please click on gouvernement link below

https://www.childcarechoices.gov.uk/guides/parents-eligibility-and-application/

https://www.gov.uk/guidance/childminders-and-childcare-providers-register-with-ofsted

https://www.tax.service.gov.uk/childcare-calc/

 

Can a Nanny be Self-Employed?

Under HMRC rule nannies cannot generally be classed as self-employed but there is an exception in some cases HMRC do grant nannies self-employed status, for example, if the nanny works in a series of temporary positions, or works for three or more families at the same time (in which case she would have to register with Ofsted as a child minder). The nanny should contact HMRC directly for approval if she requires this. HRMC will assess each situation individually.

It is worth also noting that HMRC would generally allow anybody to register as self employed and so being registered does not instantly mean that you can do all of your jobs under a self employed status.

Each new family should complete the HMRC Employment Status Indicator to decide whether the nanny should be their employee or can be self employed for the job. The onus for this is always on the employer and it is the employer who can be fined heavily by HMRC for not doing this correctly.

For more information please click on gouvernement link below

https://www.gov.uk/guidance/check-employment-status-for-tax

 

Payroll

It’s possible to do this yourself, but many families choose to use a payroll service to pay their nanny. But if you would like expert help and advice on payroll issues & nanny costs.

We recommend the following Nanny Tax who specialise in providing families with nanny payroll services. For more information please click on Nanny Tax below

https://www.nannytax.co.uk

 

Terms and Conditions

Privacy Policy