Nanny & Domestic Staff Payroll Details
📊 Employer Nanny Payroll Cost Breakdown
Hiring a nanny, housekeeper, or home carer in the UK makes you a statutory household employer under UK employment law.
Understanding total household employer costs—including Employer Class 1 National Insurance (13.8%) and 3% workplace pension contributions—ensures complete financial clarity.
⚙️ Statutory Household Employer Costs & PAYE Rules for 2026/27
1. Employer Class 1 National Insurance (13.8%)
- Secondary Threshold: Employer Class 1 NI is charged at 13.8% on all gross salary paid above £9,100 per year (£175/week).
- Employment Allowance Restriction: Unlike commercial businesses, households hiring nannies or domestic staff are NOT eligible to claim the £10,500 Employment Allowance to offset Employer NI.
2. Auto-Enrolment Workplace Pension
If your nanny is aged between 22 and State Pension age and earns more than £10,000 per year (£192/week):
- You are legally required to enroll them in a compliant workplace pension scheme.
- Statutory Minimums: 3% Employer contribution + 5% Employee contribution calculated on qualifying earnings (earnings between £6,240 and £50,270).
3. Gross Salary vs. Net Salary Agreements
Never agree a “net salary contract” with a nanny (e.g. agreeing “£500 net per week”). Under net contracts, the household employer is legally liable for unexpected tax code shifts, student loan repayments, and tax increases. Always agree a fixed gross annual salary.
📊 Practical Nanny Payroll Worked Examples
Below are two worked calculation examples illustrating total household employer costs:
- Nanny Gross Salary: **£30,000.00 / year**
- Employer Class 1 NI (13.8% above £9,100): (£30,000 - £9,100) × 13.8% = **£2,884.20**
- Employer Pension (3% above £6,240): (£30,000 - £6,240) × 3% = **£713.00**
Calculation: Total household outlay = £30,000 + £2,884.20 + £713.00 = £33,597.20. Nanny receives £24,119.60 net take-home.
- Nanny Gross Salary: **£12,000.00 / year**
- Employer Class 1 NI: (£12,000 - £9,100) × 13.8% = **£400.20**
- Employer Pension: (£12,000 - £6,240) × 3% = **£172.80**
Calculation: Total household outlay = £12,000 + £400.20 + £172.80 = £12,573.00.
📑 Common Pitfalls & Nanny Employer Warnings
- Self-Employed Nanny Status Myth: In almost all cases, nannies cannot legally be treated as self-employed. HMRC guidelines dictate that because nannies have fixed working hours, use employer equipment, and work under direct household instruction, they are legally employees subject to PAYE.
- Statutory Sick Pay (SSP) & Maternity Pay (SMP): Household employers are legally responsible for processing Statutory Sick Pay (£116.75/wk) and Statutory Maternity Pay (£184.03/wk). Small employers can reclaim up to 103% of SMP back from HMRC.
- Employer Liability Insurance Requirement: By law, household employers must hold at least £5,000,000 of Employer’s Liability Insurance to cover workplace injuries or accidents.
❓ Frequently Asked Questions (FAQ)
You can register online with HMRC as an employer up to 4 weeks before your nanny's first payday. Most families use dedicated nanny payroll agencies (such as Nannytax) to manage monthly payslips and RTI filings.
Yes, provided your nanny is an Ofsted-registered (or equivalent devolved regulator) childminder or nanny. You can pay up to £2,000 per child per year of government top-up toward nanny costs.
Yes. Full-time nannies have the statutory legal right to 5.6 weeks (28 days for a 5-day week) paid annual leave per year, which can include statutory bank holidays.
If your nanny formally submits a pension opt-out notice within 1 month of auto-enrolment, you must refund any employee pension deductions, and your 3% employer pension liability stops.