How to Use Direct Payments to Hire a Nanny and Manage Payroll Efficiently
If you are a parent of a child with special needs, you may be eligible for direct payments from your local council to help cover the cost of a nanny or carer. This allows you to hire a nanny using direct payments while retaining control over who provides care for your child. However, managing a nanny’s payroll through direct payments comes with responsibilities such as PAYE, tax, and employment law compliance.
At PAYE for Nannies, we specialise in supporting families who use council direct payments to employ a nanny, ensuring the payroll process is smooth and stress-free. Here’s how you can apply for nanny direct payments and how we can help.
What Are Nanny Direct Payments?
Direct payments are funds provided by the local authority to families with disabled children who need extra support. Instead of the council arranging care services, direct payments allow families to hire a nanny, personal assistant (PA), or carer of their choice.
These payments can cover:
✅ A full-time or part-time nanny for in-home care.
✅ A specialist nanny trained in supporting children with disabilities.
✅ A respite carer to provide occasional or overnight support.
How to Apply for Direct Payments to Hire a Nanny
To access direct payments for a nanny, you must request an assessment from your local council.
1. Request an Assessment
Contact your local authority’s social services department and ask for a Child in Need Assessment (under Section 17 of the Children Act 1989). A social worker will assess:
- Your child’s care needs and level of disability.
- The support required to meet their needs.
- Whether your family would benefit from a direct payment package.
2. Care Plan and Direct Payment Approval
If approved, the council will provide a Care Plan outlining:
- The amount of direct payments you will receive.
- How the funds can be used (e.g., hiring a nanny vs. agency care).
- Any conditions on spending.
At this stage, you should request direct payments instead of relying on council-arranged care, giving you the flexibility to choose a nanny or carer who suits your child’s needs.
3. Setting Up Direct Payments Payroll
Once your direct payments are approved, you will receive funds to pay your nanny’s salary. Since you are directly employing a nanny, you become their employer, which means you must:
✅ Register as an employer with HMRC.
✅ Set up PAYE (Pay As You Earn) to manage income tax and National Insurance.
✅ Provide a contract of employment and payslips.
✅ Manage pension contributions (if applicable).
✅ Have employer’s liability insurance.
This is where our Direct Payments Payroll Service makes everything easier.
Managing Nanny Payroll for Direct Payments
Handling payroll for a nanny using direct payments can feel overwhelming, but our expert team at PAYE for Nannies takes care of everything for you.
How We Help:
🔹 Registering you as an employer with HMRC.
🔹 Processing PAYE payroll so you don’t have to worry about tax calculations.
🔹 Providing accurate payslips for your nanny.
🔹 Ensuring compliance with National Minimum Wage and employment laws.
🔹 Handling workplace pensions if required.
🔹 Offering ongoing payroll support tailored for direct payment recipients.
With our service, you can focus on finding the right nanny or carer for your child while we handle the payroll and compliance.
FAQs
Some parents consider hiring a self-employed nanny to simplify tax responsibilities. However, HMRC has strict rules on employment status, and most nannies do not qualify as self-employed. Councils often require direct payment recipients to employ carers through PAYE, making our nanny payroll service essential.
If you’re unsure about employment status, we can help you determine whether your nanny should be hired via PAYE or self-employment.
As specialists in nanny payroll direct payments, we have years of experience supporting families who employ carers and nannies using council funding. Our service is:
✅ Reliable: Ensuring full compliance with tax and employment laws.
✅ Affordable: Competitive pricing tailored for direct payment users.
✅ Hassle-Free: We handle everything so you don’t have to.
We work with councils across the UK and understand the specific payroll needs of families receiving direct payments.
