To all of our KiwiOz current and prospective Clients and Nannies, the office will be closed from
5pm Thursday 29th March and will reopen Tuesday 3rd April at 9am.
We hope that you have a lovely, safe long weekend.
From early 2017, the government will be implementing a tax-free childcare scheme for working parents with children under the age of 12 (or under the age of 17 for disabled children). This scheme will help around two million working households with the cost of their childcare.
How will the scheme work? So far, this is what we know (see below), however if you have any further questions please give Ofsted a call on 0300 123 1231.
First of all, parents must qualify in order to take advantage of the scheme. To quality, parents must be employed and each earning at least £115 per week, but not more than £100,000 each per year. Your nanny or childcare provider must also be registered with Ofsted.
Parents will need to set up an online childcare account to pay their nanny or childcare provider directly. For every £8 parents pay in, the government will add 25% (£2), and up to a maximum contribution of £2,000 per child, per year. For disabled children, the government will contribute up to a maximum of £4,000 per year.
Our friends at Nannytax have put together some really helpful fact sheets, which will help answer a lot of questions you may have around the scheme:
For nannies/child providers
In 2012, the Government introduced the Pensions Act. This Act means that every UK employer must provide eligible staff with a workplace pension and contribute towards it. Employers must also automatically enrol qualifying workers into the scheme by the Staging Date assigned to them by the Pensions Regulator.
This legislation applies to all employers, including Nanny Employers.
What does that mean for me if I’m a Nanny?
That means that, if you qualify, you will be enrolled into a pension scheme. If this is the case, your employer will have to send you a letter telling you that you've been enrolled. If you haven't been enrolled, you'll still get a letter that will explain why.
To meet the criteria for automatic enrolment, you must be:
What if I don’t automatically qualify; can I opt in?
If you do not meet the criteria to automatically qualify, you can still opt in if you are aged between 16 and 75. However, your employer does not have to contribute if you earn less than the Lower Earnings Limit, which is currently £5,824 per year (i.e. £112 per week or £486 per month).
What if I qualify to be automatically enrolled; can I opt out?
If you have been automatically enrolled, you can choose to opt out. However, you need to do this within the first month in order to receive a refund of any contributions made.
It’s important to note that no pressure can be put upon you from your employer to opt out!
How much will be contributed to my pension?
At present, the total amount of minimum contributions towards pensions is 2%. However, from 1st October 2016, this will increase to 5%. This will then increase to 8% from 6th April 2018 onwards.
Here is a helpful table to breakdown how those percentages are/will be made up:
Earnings basis for contributions
In order to receive any employer contributions towards your pension, you need to be earning between the Lower Earnings Limit (£5,824 per annum) and the Upper Earnings Limit (£43,000 per annum).
Opting in and employer contributions:
If I decide to go ahead with a pension, can I transfer it (e.g. if I’m moving back to my home country)?
We asked our friends at Nanny Tax about this one, as it will be a common situation our KiwiOz Nannies will face.
The basic answer is yes; you can transfer your pension—so long as you have a pension set up in your own home country (e.g. KiwiSaver in NZ) that you can transfer it to.
What if I want to withdraw my pension rather than transfer it?
Unfortunately, it’s not that straight-forward/easy to withdraw your pension.
If you need to withdraw due to bankruptcy, you can negotiate with your pension provider to withdraw some of your contributions—however, they would likely charge a fee for this.
If you need to withdraw your pension for other reasons, then pension providers will answer requests on a case-by-case basis. Our friends at Nanny Tax said that pension providers probably would allow it if there were good reason for the request, but providers are not obliged to comply and may well charge a hefty fee. On the other hand, some pension providers may have stricter rules and may not allow withdrawals at all. This could be something to bear in mind when choosing a pension provider.
My Nanny is part-time; will I have to set up a pension for her?
Yes – even though your nanny might not need to be enrolled she has the legal right to join a pension. That means that you need to have a pension in place for her to join.
What if my Nanny doesn’t want a pension; do I still have to enrol her?
If your Nanny qualifies for automatic enrolment, you are legally obliged to enrol her. However, your nanny can always opt out of the pension scheme once they’ve been enrolled if they don’t want to take part.
When will automatic enrolment affect Nanny Employers?
Automatic enrolment is being introduced gradually. The day the new legislation applies to you is called your ‘Staging Date’. Your Staging Date is decided by the last two characters in your PAYE reference.
I’m a Nanny Employer and have received an Automatic Enrolment Letter; what does this mean?
If you’ve received an Automatic Enrolment Letter, it means that it is now less than 12 months until your Staging Date—which is the date from which you’ll have to provide a workplace pension scheme for your Nanny.
You may have also been sent a letter asking you to nominate a point of contact for automatic enrolment—also known as your AE Contact. This is the person that the Pensions Regulator will contact regarding all of your nanny workplace pension obligations.
From there, the next step will be to choose a workplace pension scheme, and then check whether your Nanny qualifies for a pension. If she does, then you’ll need to:
The short answer is no; it is actually illegal for you to ask potential employees whether or not they plan to opt in or out. A good comparison here is if you were to ask a potential employee whether or not they plan to get pregnant in the next year or so!
If you have any further questions about workplace pensions for your Nanny, or if you’re a Nanny and want to find out more—please don’t hesitate to get in touch with your KiwiOz Consultant, as they’d be happy to help!
If you're a parent considering hiring a nanny, you may have found there is more to consider than first meets the eye!
Nannies are official employees, and as such you are legally required to fulfil professional employment standards. That means you need to provide an employment agreement, be clear on hours, salary, holiday pay, sick pay, annual leave, etc., and organise nanny tax. Your nanny is legally eligible for standard employment rights such as redundancy pay and a workplace pension.
NET OR GROSS WAGE ARRANGEMENTS FOR NANNIES
There is a lot of confusion around whether to offer your nanny a net or gross salary. Along with other industry leaders, we highly recommend you to implement a gross salary nanny tax arrangement with your nanny.
If you agree a net nanny salary, you are in the firing line to absorb all of the additional costs that build up over time as a nanny employer. For example, if you agree a net rate of £350 per week, you will be liable to pay NI on top of that. If the NI rate increases, you will be liable to pay for the increase, as your nannies net rate is set.
If you had agreed a total cost (gross) of £450 for example, then this will include your nanny's PAYE. This is just one small example of how a gross rate benefits the employer.
THE GOOD NEWS
The good news is that once you're all set up as an employer, it's easier than you might think to administer a nannies employment. You can organise nanny payroll and tax yourself, but for a relatively small fee you can get a nanny tax agent to do it for you, so you don't have the hassle of the paperwork.
KiwiOz Nanny Agency London works with a reputable nanny tax partner to deliver our families an industry leading tax and payroll service. To find out more, please contact us today for a free, no obligation chat about your needs and how we might be able to help.
We look forward to hearing from you!
We all know that parenthood changes us. Our priorities, our view on life, there is a shift when the magic of babydom hits your home and your heart!
Our London office will be closed for Christmas from 5pm Friday the 20th of December until 9am Monday the 6th of January.
We would like extend a huge thank you to all of the families who have used our services this year- we've had a great year and we hope you have too!
Merry Christmas and we look forward to being of help to you in 2014.
Rachel, Karen, Danielle, Sheena and the team at KiwiOz
We're exited to be launching a brand new Au Pair Programme in 2014. With offices in London, Sydney and Auckland, we deal with many great candidates who want to confirm a host family prior to leaving home.
A KiwiOz Au Pair will be an excellent option for your family if you are seeking quality live in care for 6-12 months plus, at a cost effective rate.
If you, like many parents are concerned about the increasing cost of childcare in the UK, you may have been worried to hear in the press that you'll soon be required to make pension contributions to your nanny.
The Daily Mail had this report claiming a rise in costs of up to £600 per year- a substantial amount for any home employer.
So, what does this really mean for parents? Well, the government actually introduced the Pensions Act in 2012. It requires all employers who pay their employee more than £9,440 per year to provide a workplace pension.
However, if you like most domestic employers employ less than 30 people, you won't have to enrol or take any action before June 2015, and for some families it may be much later- even as late as 2017.
Contributions will also increase over time, so you may find your first year or two of payments are as little as £200 per annum.
The benefit of pension contributions for nannies
Nannies have long fought for a more professional image and more respect in their industry. Too many parents still try to pay their nanny under the table- whilst expecting high standards on the job.
At KiwiOz Nanny Agency London we always find the most successful nanny relationships are with families who respect the nannies role, provide a contract and pay tax and NI where appropriate.
Adding a pension contribution on to this for nannies will be one further step towards formalising the family/ nanny relationship and professionalising the industry, which in turn will mean better nannies, more efficiently run households and happier families.
For more updates on nanny industry news sign up to get our blog via email below:
Or to find out more about Pensions for nannies, go to the NannyTax website.
Our little home dedicated to sprinkling some 'Down Under' Sunshine in the lives of London families and nannies ☺
READ MORE ABOUT...