Reasons Nanny Can’t Be Self-Employed
UK law is specific when it comes to nannies and how their employment status is managed. As an employer that has a nanny, you are going to have to deal with specific requirements. This is going to include the nanny’s pay when it comes to managing payroll records. This includes dealing with figures associated with submitting paydays and deductions.
Nannies will sometimes look to avoid paying tax or NI out of pocket. However, this is not always going to be a choice for them as there are specific categories in place for this type of employment and it cannot be cited as self-employment. HMRC is particular about an employer’s responsibilities especially when it comes to the role of nanny. Employers are expected to register with the government and managed both NI and tax payments. Using a nanny cost calculator makes the process of hiring a nanny much easier.
It is important to focus on this distinction. Whenever there is national insurance involved, this is only going to involve an employed person and not a self-employed individual. Due to this, there are significant losses that the government has to deal with when employees are treated as being self-employed. This is why the HMRC is strict when it comes to the underlying rules.
It is best to get out in front of this or payments might have to go in later in the form of penalties or unpaid tax. This can also lead to the loss of benefits due to the employment status being incorrect.
There are times when self-employment is an option. A good example of this would be when nannies want to move forward with a specialisation that is going to cause them to switch jobs all the time. This is an exceptional case and when that happens, it is best to take a look at the employment status indicator tool that is set up on the HMRC site. This will allow you to take a look at a nanny’s real status. The tool is effective and provides great insight into a person’s employment.
What Happens If Nanny Is Self-Employed?
There are times when a nanny is going to be officially registered with the government and will already be paying national insurance and tax. This can happen when the nurse is already established as a self-employed childminder at home and/or runs a separate business in another niche. However, this doesn’t have anything to do with your business with the nanny as they will not be deemed as self-employed in their role with you. It just means they have an additional source of income aside from being a nanny.
Nannies can also set up their documents in a way to have all income from previous nanny jobs listed as self-employed income. This has to do with how previous employers were deducting money from the source. When this happens, the nanny wouldn’t have any other option but to go with the status quo. However, employers are expected to deduct NI and tax from a nanny on their payroll.
There are additional factors that can play a role in a person’s employment status. This can include details associated with pensions, Statutory Maternity, Statutory Sick Pay, paid annual leave, and Statutory Redundancy Pay. While a self-employed individual is not going to have access to these ben