Hiring a nanny means becoming an employer, which comes with legal and financial responsibilities. To ensure you meet all obligations, follow this step-by-step employer checklist covering everything from payroll to contracts. PAYE for Nannies simplifies the process by handling payroll, tax, and pensions, so you can focus on finding the right nanny.
Step 1: Register as an Employer with HMRC
Before your nanny starts, you must register with HMRC as an employer. This allows you to set up nanny payroll, report taxes, and stay compliant.
Step 2: Set Up Payroll & Payslips
As an employer, you must:
- Calculate and deduct Income Tax & National Insurance.
- Provide weekly or monthly payslips.
- Report to HMRC under Real-Time Information (RTI).
Step 3: Draft a Legally Compliant Contract
UK law requires you to provide a written contract on or before the start date of employment. A nanny contract should include:
- Working hours & pay structure
- Holiday entitlement & statutory benefits
- Notice period & termination terms
- Pension obligations
Step 4: Set Up a Workplace Pension (If Required)
If your nanny earns £10,000+ per year, is aged 22 or older, or asks to be enrolled, you must:
- Enrol them in a workplace pension.
- Make employer contributions (minimum 3%).
- Manage pension payments and opt-ins/outs.
Step 5: Get Employer’s Liability Insurance
By law, you must have Employer’s Liability Insurance, which protects you in case your nanny is injured or falls ill at work. We offer a policy through our partner at a cost of £94.
Step 6: Ensure Statutory Payments Are Covered
Your nanny is entitled to statutory benefits, including:
- Sick Pay (SSP) if they are off work for 4+ days.
- Maternity & Paternity Pay (if eligible).
- Holiday Pay (5.6 weeks per year).
Step 7: Consider Additional Costs
- DBS Check – If needed, you may cover the cost (~£50).
- Nanny Travel Expenses – If they use their car for work, mileage should be reimbursed.
- Payroll & Tax Administration – A nanny payroll service ensures compliance and saves time.
