Nanny Payroll, PAYE & National Insurance

Are you the nanny’s employer?

GOV.UK says you are usually considered the employer of a nanny, housekeeper or other person working in your home when you hire them directly and they are not self-employed or paid through an agency.

This matters because employment status determines who is responsible for tax, National Insurance, employment rights and payroll. GOV.UK also states that an employer cannot simply ask an employee to become self-employed to avoid employer responsibilities.

See GOV.UK: employing someone to work in your home.

When do you need to register for PAYE?

HMRC sets rules for when an employer must register for PAYE. The thresholds and conditions can change, so use the current PAYE and payroll guidance rather than relying on an old article or a salary figure copied from another website.

Even where registration is not required, HMRC may still require payroll records to be kept. For most permanent nanny roles with regular earnings, families should expect payroll to be part of the employment setup.

What does nanny payroll actually involve?

Payroll is the process used to record the nanny’s gross pay, calculate deductions and employer liabilities, issue a payslip and report the required information to HMRC.

Depending on the employee and pay period, payroll may include:

gross salary or wages;
Income Tax deducted through PAYE;
employee National Insurance;
employer National Insurance;
workplace pension contributions where applicable;
statutory payments such as sick or maternity pay where the employee qualifies;
other lawful deductions or benefits where relevant.

Gross pay and net pay are not the same thing

Families should agree salary in a way that makes employer costs clear. Gross pay is the employee’s pay before tax and employee deductions. Net pay is what the employee receives after deductions.

An agreed net-pay figure can make budgeting harder because tax codes, National Insurance and other deductions can change. For permanent employment, a gross salary is usually the clearer basis for a written offer and payroll.

Who can run the payroll?

You can run PAYE yourself using payroll software or appoint a payroll provider. GOV.UK states that even if a payroll provider completes the calculations and submissions, the employer remains legally responsible for completing PAYE tasks correctly.

See GOV.UK guidance on running payroll or using a provider.

What records and reports are needed?

Employers need to keep payroll records and report employee pay and deductions to HMRC in the required format and at the required time. Employees must receive payslips showing their pay and deductions.

Payroll also needs to reflect relevant changes, such as a new starter, changes in pay, statutory leave, pension enrolment or the end of employment.

What about employer National Insurance?

Employer National Insurance is a separate employer cost from the nanny’s gross salary. The applicable thresholds and rates depend on the tax year and the employee’s category, so use the current HMRC employer rates rather than a static figure on a recruitment page.

Households employing someone for personal, household or domestic work, such as a nanny, are generally not able to use Employment Allowance for that employee unless the worker falls within a qualifying care or support exception. See the current Employment Allowance eligibility guidance.

Do you need to provide a workplace pension?

Auto-enrolment duties apply when the employee meets the relevant eligibility rules. GOV.UK currently says employers must enrol and contribute for staff who are aged between 22 and State Pension age, normally work in the UK and earn at least £10,000 a year.

Eligibility can change if age or earnings change, so household employers should check the current workplace pension guidance.

What does Filipino Nanny Agency handle?

Our current client Terms and Conditions state that, for permanent placements, the client is responsible for the employment contract, paying wages, deducting and paying tax and National Insurance, pension contributions where relevant, and other employer obligations.

That is why we keep agency fees separate from salary and payroll. The agency introduces candidates and supports the placement process; it does not replace the household’s employer responsibilities for a permanent direct hire.

What should you set up before the first payday?

Confirm that the nanny is being employed directly and identify the correct employment status.
Complete the right-to-work check before employment begins.
Agree gross pay, working hours and pay frequency in writing.
Register as an employer and set up PAYE where required.
Choose payroll software or a payroll provider.
Check workplace pension duties.
Make sure Employers’ Liability insurance is in place where required.
Provide the written employment particulars and payroll records required by law.

How does payroll fit into the total cost of employing a nanny?

The nanny’s salary is only one part of the household’s total employment cost. Employer National Insurance, pension contributions, paid holiday, insurance and any agreed travel, accommodation or other benefits can affect the overall budget.

We are keeping those components separate from the agency fee so families can see what they are paying the nanny, what they owe as an employer and what they pay the agency.

Official sources to keep bookmarked

Legal and tax note: This is general information for household employers, not individual tax or legal advice. HMRC thresholds, rates and employment circumstances vary, so use current official guidance or an appropriate payroll, tax or legal professional for your situation.