The Ins and Outs of Nanny Tax

what is the nanny tax

Are you aware of what is the nanny tax in the UK? This refers to the submission of the time tax return when you are earning from the role of a self-employed nanny in the UK. There are multiple guardians or parents who are seeking professional help in form of childminders or nannies to take care of the children while they are at work or any other relevant commitment. Moreover, there are certain tax liabilities that come with the action of hiring a nanny for your kids that you must consider before the process begins.

There is no escape from the tax liabilities in this case, as you know the tax margin is already very slim according to HMRC. Tax affairs are a serious matter of concern for HMRC. If you are not aware of the required information, we have got you covered here. As this article will delve into the discussion further about what is the nanny tax, what can be the consequences if you do not file tax returns, and how to check the employment status of the nanny.


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What is the Nanny Tax? – Self-Employed Nanny and Childminders

When you are earning by being a nanny in the UK that too with the status of self-employment, you are under the obligation to make a declaration of your income to HMRC immediately. You can simply declare the amount of money your earn while you are submitting your tax returns so that the tax bills turn out to be accurate according to your income. The procedure of submitting tax returns will occur every tax year. The deadline to submit the tax returns is by the January end. The tax year is considered to be a duration from the 6th of April to the 5th of April.

The question that arises here is what is the amount of tax that you will owe to HMRC. Well, this totally depends on the amount of income you earn that will help HMRC to decide your tax bills, this is why it is always focused to declare your accurate income to HMRC. The two main form taxes that you will pay as a many are national insurance and income tax.


What is The Result of Not Filing the Tax Returns?

If you are aware of the personal allowance details, this is an easy discussion for you. Personal allowance happens to be the amount of your meaning that is free of tax. This means you will not pay any tax on the personal allowance. In the case of an individual who earns a low amount of income, the person is entitled to full personal allowance benefits.

Moreover, income tax is not paid if your income is as low as it does not even reach the certain limit of £12,570. You do not have to pay tax on this amount. However, you are liable to pay the national insurance with this amount. When you are earning an income below the amount of £12,570, you will still be liable to file your tax returns. This is a way to inform HMRC about the income sources and the exact amount of earnings. The factor of transparency will stay intact in this case. The only exemption of not filing the tax returns is when your earnings are £1,000 or low within the duration of a tax year.


Guardians and The Nanny Tax

The employment status of the nanny that you are hiring for your children to be taken care of is an important factor to realise. This will help you to be clear whether your nanny is in a full-time job or part-time job. There are several cases in the UK that are working as self-employed nannies while holding on to a full-time job as well. It is important that you get yourself clear with these details before finalising the hiring process. Now when you are in the role of an employer, you can add to your tax liabilities as an employer. Moreover, consider the following before hiring a childminder for your kids.


How to Check the Employment Status of a Nanny?

Before you sort out the final steps of hiring the many, it is imperative to know what is the employment status of your nanny. Whether it is a self-employed case or a full time. You must be wondering how to check the employment status of a nanny.

Some of the cases of nannies observing the working hours are decided by them and they even have the option to refuse any unavailable hours. Your nanny is self-employed in such a case. Now let us take the example of a nanny who is working 40 hours within a week or 20 hours, that is when the employment status is full-time or part-time. The nanny will have to seek your permission before she takes a day off. Such a case is applicable when a nanny is employed by you.


The Bottom Line

Now that you have gathered a fair amount of information about what is the nanny tax, we can bring the discussion towards wrapping up. We can not deny the importance of the nanny tax and it is equally imperative to identify the employment status of your nanny before the hiring is finalised. This is because this might put you in additional tax responsibilities. We hope these few minutes of reading will help you to develop a better understanding of what is the nanny tax.


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Disclaimer: All the information provided in this article on what is the nanny tax, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.