Paying someone to act as your nanny, housekeeper or gardener may result in you being considered an employer. In turn, this may involve you needing to meet statutory employment rights and deducting any tax or National Insurance contributions from their wages.
These obligations will not apply if:
- They are self-employed, or
- Paid through an agency.
Au pairs
Au pairs usually live with the family they work for and are unlikely to be classed as workers or employees. They are not entitled to the National Minimum Wage or paid holidays.
They’re treated as a member of the family they live with and get ‘pocket money’ instead – usually at least £90 a week.
Carers and personal assistants
You are classed as an employer if you pay a carer or personal assistant directly, even if you get money from your local council or the NHS to pay for them.
There are organisations that can help with your employer responsibilities, such as recruiting and paying your carer.
Employee rights
Anyone you employ must:
- have an employment contract
- be given payslips
- not work more than the maximum hours allowed per week
- be paid at least the National Minimum Wage
If they meet the eligibility requirements, they are also entitled to:
- Statutory Maternity Pay
- Statutory Sick Pay
- paid holiday
- redundancy pay
- a workplace pension
Tax issues
As an “employer” you are required to comply with the following tax obligations:
- check if the person can work in the UK
- have employers’ liability insurance
- register as an employer
- set up and run payroll, or pay someone else to do it on your behalf (even if you pay the employee in cash)
- pay statutory benefits, for example maternity pay and sick pay
- deduct and pay the employee’s Income Tax and National Insurance contributions
If you employ a nanny and you are eligible for Tax-Free Childcare, you can use your childcare account to pay their Income Tax and National Insurance contributions.
HMRC make it clear that you cannot ask your employee to become self-employed to avoid these obligations as an employer.