Many families hiring a nanny wonder whether they can classify them as self-employed to simplify payroll and tax responsibilities. However, in most cases, a nanny does not meet the requirements for self-employment, and HMRC typically considers them an employee. Misclassifying a nanny’s employment status can lead to legal and financial issues, but PAYE for Nannies can help ensure compliance and manage payroll correctly.
Why Most Nannies Are Employees, Not Self-Employed
To determine nanny employment status, HMRC considers key factors:
- Control – If you set the nanny’s working hours, duties, and schedule, they are likely an employee.
- Regular Salary – If you pay a set wage (hourly, weekly, or monthly), rather than per job, this points to employment.
- Exclusive Work Arrangement – If the nanny works only for your family or follows your routine, they are an employee.
- Holiday & Sick Pay – If your nanny receives paid leave and statutory benefits, this reinforces employee status.
If a nanny is genuinely self-employed, they must:
- Work for multiple families and control their own schedule.
- Provide their own equipment and resources.
- Take financial responsibility for their own tax and National Insurance.
Risks of Misclassifying a Nanny as Self-Employed
If a nanny is incorrectly classified as self-employed, HMRC may:
- Demand backdated tax and National Insurance contributions.
- Impose fines and penalties for incorrect classification.
- Require the employer to cover unpaid statutory benefits like sick pay, maternity pay, and holiday pay.
How We Can Help Regularise Nanny Employment
At PAYE for Nannies, we take the complexity out of self-employed nanny payroll concerns by:
- Assessing your nanny’s employment status to ensure compliance.
- Handling PAYE registration and payroll setup so tax and NI are properly managed.
- Providing legally compliant contracts that reflect the correct employment terms.
- Managing statutory benefits, including pensions, holiday pay, and sick pay.
