Chartered Accountant

Nanny Tax > Nanny Payroll Newsletters > Nanny Payroll Newsletter 2003, April

NEWSLETTER APRIL 2003

NANNY COMPANY SCHEMES

Unfortunately, the Government has plugged the loophole which previously enabled nanny companies to pay nannies a combination of salary and dividends thus saving large amounts of tax and national insurance. With effect from 9th April 2003 services performed by nanny companies will be subject to the same rules as contractors currently trading under IR35 regulations - ie all payments to the nanny will be subject to tax and national insurance.

We will be contacting anyone who has set up a nanny company within the next few days to discuss the practical implications of closing the company down and reopening the original PAYE schemes.

TAX RELIEF FOR CHILDCARE

The recent Budget provisions in respect of nanny companies has sent a very strong message that the Government is not interested in assisting middle income families with childcare costs. It also once again highlights the inequitable situation that employers of nannies face whereby they are forced to pay their nannies a salary out of income which has already been taxed.

Sara Graff will be lobbying her MP within the next few weeks and hopes to set up some kind of petition where hopefully we will be able to enlist your support. We will keep all our clients informed of any developments in this area.

TAX CREDITS

With effect from 6th April 2003 the Children's Tax Credit and Working Families Tax Credit are abolished. These are replaced by various elements of the Child Tax Credit (CTC) and the Working Tax Credit (WTC). Payments are now generally made by a combination of payment directly into the recipient's bank account and via the payroll. The amount of any sums to be paid via the payroll will be advised by the tax credit office.

WTC is primarily for those with incomes of less than £13,000 per annum but entitlement may extend beyond this threshold for those with children.

The Child Tax Credits benefit families with children where the joint income each year does not exceed £58,000. Whereas previously the children's tax credit was given by way of personal allowance through the employee's tax code, this has now changed and applications must be made directly to the tax credit office. Any applications will only be backdated for three months and therefore in order to obtain the full amount of tax credit for 2003/04 applications must be received by 5th July 2003.

If your nanny has her own child, please advise her, if she has not already done so, to complete a form which can either be obtained by telephoning 0845 300 3900 or can be completed on-line on www.taxcredits.inlandrevenue.gov.uk.

Please also note that there are additional tax credits available for parents for the tax year in which a baby is born.

NATIONAL INSURANCE CONTRIBUTIONS

From 6th April 2003 national insurance contributions have increased by 1% for both employees and employers national insurance. The additional amount you will be required to pay as an employer paying your nanny a net salary will vary depending on your nanny's salary. A net salary of £250 per week will now cost the employer the sum of £352 per week (previously £346) and a net salary of £350 per week will now cost the sum of £520 per week (previously £510 per week).

TAX RETURNS

You will have probably received by now your own 2003 self-assessment tax return. Please note that Sara Graff is a qualified Chartered Accountant and Chartered Tax Advisor and provides accounting and tax services in addition to the general Taxing Nannies service. She would be happy to assist you in preparing your tax return and if you wish to avail yourselves of this service or would like some general advice please feel free to ring Sara on +44 (0)208 882 6847.

Nanny Tax Forms » Nanny Tax Forms » P11D » P35 » Nanny Tax Tables » Inland Revenue Forms	Parental Advice » Maternity Rights » Childcare Roles » Mother Back To Work » Nanny Share » Nanny Employment Issues » Positive Parenting Products	Childcare Advice » Childcare Publications » Childcare Vouchers » Childcare Websites » Nanny Agencies » Nanny Shares Agencies
Taxing Nannies offers efficient PAYE wage Payroll Services to a range of small employers in the UK which include; nanny agencies, nannies, child carers plus housekeepers, cleaners, gardeners, butlers, drivers, & other small companies. All Rights Reserved. © Taxing Nannies 2009 \| Sitemap

Maznet - Website Design Hertfordshire