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Nanny Tax > Nanny Payroll Newsletters > Nanny Payroll Newsletter 2006, September

NEWSLETTER SEPTEMBER 2006

NATIONAL MINIMUM WAGE

Please note that with effect from 1 October 2006 the national minimum wage is rising to £5.35 gross per hour for anyone aged 22 and over and £4.45 gross per hour for those aged 18 to 21. The minimum rate for 16-17 year olds is increasing to £3.30 per hour.

The minimum wage does not apply to a live-in nanny who lives with the family. However where the employee has separate accommodation then the national minimum wage will apply subject to an offset of 4.15 (£29.05 per week) for each day that accommodation is provided.

Please contact Taxing Nannies if you require further information.

CHILDCARE VOUCHERS

If your employer gives you childcare vouchers, the first £55 per week per employee is exempt from tax and national insurance (and employer's national insurance) provided approved childcare is used. If both parents receive childcare vouchers they are each entitled to receive £55 per week free of tax and national insurance. For a basic rate tax payer the tax and national insurance savings on £55 per week amount to £18.15 per week and for a higher rate tax payer the relief amounts to £22.55 per week.

If you are a director of a limited company and would be interested in setting up a childcare voucher scheme Taxing Nannies would be happy to assist.

For more information on approved childcare please contact Taxing Nannies or visit www.childcareapprovalscheme.co.uk/carer/qualifications.asp

INLAND REVENUE INCENTIVE PAYMENTS

We have filed all our clients' 2005/06 End of Year Returns online and therefore all our clients are eligible for the £250 incentive payment from the Inland Revenue. Where a tax liability in excess of £250 existed at 5th July 2006, we have offset the incentive payment against that liability resulting in a lower tax liability for that quarter. However, where our clients have ceased to employ a nanny or only have small tax liabilities we are in the process of obtaining refunds in the form of cheques from the Inland Revenue.

The incentive payments for employers filing End of Year Returns online for 2006/07 is reduced to £150 and the payments for following years will be £100 for 2007/08 and £75 for £2008/09.

EMPLOYMENT STATUS

As we have previously advised you an employer who wrongly treats a nanny as self-employed is liable to pay over to the Inland Revenue income tax and national insurance that would have been payable under PAYE. Until now the Inland Revenue have often only collected national insurance on the basis that the employee would have paid income tax as a self-employed individual.

However, the Inland Revenue have changed their practice and will now request the full income tax from the employer and allow the employee to reclaim the tax paid as self-employed. They will only agree to offset an individual's self-employed tax against the employer's liability if the employee gives a written undertaking that they will not seek a refund of tax.

For further information on this or any other matter please contact Taxing Nannies

ACCOUNTING SERVICES AND TAX RETURN SERVICE

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 2006 tax return or assist you with other accounting services and if you wish to avail yourselves or this service or would like some general advice please free to ring Sara on +44 (0)208 882 6847.

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