Gross Pay or Net Pay
Although traditionally nannies are employed and paid an agreed Net Pay, Pay for Nannies recommend that you, the employer, make sure that in the employment contract with your nanny you define the gross wage / salary your nanny will be paid, even if this is based on a notional "Net Pay".
Net Pay Vs Gross Pay
Note that agreeing a "Net Pay" can leave you, the employer, open to unforeseen, unexpected costs, for example:
- You employ a nanny and a previous employer has underpaid tax. The shortfall will be recovered from you via your payroll
- Your nanny has other sources of income and the Inland Revenue decide to collect tax due on it through your payroll
- Your nanny has more than one job
- Your nanny receives benefits in kind, which the Inland Revenue deems are taxable
- Changes in tax law
For these reasons, we recommend that any "Net Pay" negotiated at the time of the interview with your nanny is converted to an equivalent "Gross Pay".
We can help with this agreement by providing you with an estimate "Net Pay" v. "Gross Pay" calculation. For this exercise we will assume that your nanny has the current standard tax code of 603L.
Provided that there are no changes in the nanny's personal circumstances with the revenue during the fiscal year, the nanny can be virtually guaranteed the "Net Pay" that was discussed at the interview.
