The cost of nanny childcare can vary depending on whether your nanny lives with you, their qualifications and the average nanny salary in your area. Our partners at Nannytax share four ways you can save money on your nanny childcare costs.
Nannytax believes the benefits of nanny childcare should be made more accessible to working parents across the country, here are their top four ways to save money on nanny childcare costs:
A nanny share is an arrangement where two or more families employ the same nanny.
By sharing the nanny, you can split the cost of the salary (each family must pay at least national minimum wage). How much you can save depends on how many shared hours your nanny works. As an example, it has been reported that if you share your nanny for 25 hours per week you could reasonably save £5,000-6,000 per year.
It's important to know that all parties in a nanny share are classed as separate employers by HMRC which means separate PAYE Schemes, contracts, and payslips. Companies like Nannytax can support both parties with these aspects of employment.
Tax-free Childcare is a government financial support scheme to help families with their childcare costs. If you employ an Ofsted-registered nanny and meet the scheme's eligibility criteria, you can receive up to £2000 per year, per child towards the cost of your nanny childcare.
Tax-Free Childcare works through an online childcare account. Much like a savings account, this will be used by both you and the Government to pay into. For every £8 you pay into the account, the Government will top it up by an extra £2 (up to a cap of £2,000 per child, per year).
A nanny is often considered one of the most expensive childcare options. However, the cost-saving benefits of a nanny become apparent if you have more than one child. A nanny charges by the hour and the cost may not go up (or only rises a little) for additional children.
We always recommend families agree on a gross salary with their nanny. First and foremost, this avoids the risk of the employer becoming liable for their nanny's unpaid tax liabilities and even student loans.
A gross salary also allows the employer to control their costs. It incorporates tax no matter how much this might be. If an employer commits to a net salary, they are essentially writing a blank cheque for any tax and NI due to HMRC on top of this amount. This means the nanny may end up costing a lot more than first anticipated. If you need help converting a net salary to a gross or vice versa, you can use our trusty Nanny Salary Calculator.