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Newsletter Spring 201107 April, 2011
TAX AND NATIONAL INSURANCE RATES

The personal allowances for income tax are increasing from 2011/12 to £7,475 and the threshold for national insurance is also rising.  From 2011/12, for salaries of £136 per week or less, no tax or NI will be payable if this is the nanny's sole employment.  If the nanny is employed elsewhere, there will still be a tax liability although the National Insurance threshold applies to each employment.  National insurance rates have risen by 1% for employees to 13% and for employers to 13.8%.  For further details please see http://www.taxingnannies.co.uk/nannytaxtables.php

The Government has introduced a scheme to exempt businesses in certain areas from paying Employers’ National Insurance contributions.  However, this does not apply to employers of nannies or domestic workers.

MILEAGE RATE

The mileage rate increased on 6th April from 40p per mile to 45p per mile for the first 10,000 miles so employers can pay this amount to their nanny without any tax charge being incurred.
 
NATIONAL MINIMUM WAGE RATE

The national minimum wage rate increased from 1st October 2010 to £5.93 per hour for employees aged 21 and over (previously £5.80), £4.92 for employees aged 18-20 (previously £4.83) and £3.64 for workers aged 16-17 (previously £3.57).  The daily accommodation offset rate remains at £4.51 for each day worked. The higher national minimum wage now applies to employees aged 21 and over rather than the previous threshold of 22 and over.

Although au pairs and domestic workers living with a family can be exempted from the minimum wage requirements this is only when they live as part of the family sharing in tasks and leisure activities on the same basis as the family.  Therefore most live in nannies are not exempted from the national minimum wage requirements in which case the minimum employers need to pay are the rates stated above less the accommodation offset.

CHILDCARE VOUCHERS
From April 2011, the weekly amount that parents joining an employer-supported childcare scheme will be able to claim exempt of income tax and disregarded of NICs will remain at £55 for basic-rate taxpayers, but will be reduced to £28 and £22 per week for higher and additional-rate taxpayers respectively.
All current users will continue to enjoy the same exemption and disregards beyond April 2011.
REDUNDANCY

Where an employer’s situation changes so that they no longer require a nanny, the employee is deemed to be made redundant.  Where the nanny has been employed for more than two years redundancy pay is payable at the following rates:

0.5 week’s salary for every year worked aged 18-21
One week’s salary for every year worked aged 22-40
One and a half week’s salary for every year worked from aged 41 

From 1st February 2011 the statutory redundancy cap (ie the maximum weekly pay that is required to be made) has increased to £400 gross.  More information can be found on www.direct.gov.uk

NEW REGIME FOR PAYMENT OF PAYE AND NI

In April 2010 a new penalty regime was introduced where more than one PAYE payment is late.  The amount of the penalty depends on the number of defaults in any 12 month period.   

All cheques must clear by the 19th of the month rather than just being received.  Where the 19th is a weekend or Bank Holiday, the cheque must clear by the last working day prior to the 19th.  Electronic payments must clear HMRC’s bank by 22nd of the month and again, where there this is a weekend or Bank Holiday, payments must be received by the last bank working day prior to the 22nd.


ACCOUNTING AND TAX RETURN SERVICES

Please note that Sara Graff, proprietor of Taxing Nannies, is a qualified Chartered Accountant and Chartered Tax Advisor.  She runs an accounting practice, Sara Graff & Co, alongside Taxing Nannies, providing a variety of accounting and tax services.  She would be happy to assist you in preparing your tax return or assist you with other accounting matters and if you would like further information please ring Sara on 020 8882 6847.

 
       
Taxing Nannies Newsletter - Autumn 201002 November, 2010

NEW REGIME FOR PAYMENT OF PAYE AND NI

Please remember that in April 2010 a new penalty regime was introduced when more than one PAYE payment is late.  The amount of the penalty depends on the number of defaults in any 12 month period.  Penalties will be levied after April 2011 and interest will also be calculated on late payments. 

HMRC has also changed the way they deal with payments received for PAYE.  All cheques must clear by the 19th of the month rather than just being received.  Where the 19th is a weekend or Bank Holiday, the cheque must clear by the last working day prior to the 19th.  Electronic payments must clear HMRC’s bank by 22nd of the month and again, where there this is a weekend or Bank Holiday, payments must be received by the last bank working day prior to the 22nd.

A separate factsheet with full details has been sent to existing clients. 

NATIONAL MINIMUM WAGE RATE

The national minimum wage rate increased from 1st October 2010 to £5.93 per hour for employees aged 21 and over (previously £5.80), £4.92 for employees aged 18-20 (previously £4.83) and £3.64 for workers aged 16-17 (previously £3.57).  The daily accommodation offset rate remains at £4.51 for each day worked. The higher national minimum wage now applies to employees aged 21 and over rather than the previous threshold of 22 and over.

Although au pairs and domestic workers living with a family can be exempted from the minimum wage requirements this is only when they live as part of the family sharing in tasks and leisure activities on the same basis as the family.  Therefore most live in nannies are not exempted from the national minimum wage requirements in which case the minimum employers need to pay are the rates stated above less the accommodation offset.

TAX ASSESSMENT NOTICES RE: UNDER OR OVERPAYMENT OF TAX

There has been much written in the press about under and overpayment notices being sent to taxpayers where incorrect tax codes have been applied against salaries.  It may be that your employees receive such a notice where they have had more than one employment in the tax year.  Not all requests for tax will be valid and any such assessments should be checked carefully.  Taxing Nannies would be happy to provide a checking service.  A small fee may apply.


CHILDCARE VOUCHERS

From April 2011, the weekly amount that parents joining an employer-supported childcare scheme will be able to claim exempt of income tax and disregarded of NICs will remain at £55 for basic-rate taxpayers, but will be reduced to £28 and £22 per week for higher and additional-rate taxpayers respectively.

All current users will continue to enjoy the same exemption and disregards beyond April 2011.  Therefore we would advise anyone eligible to apply for vouchers to do so before April 2011 in order to continue to benefit from the tax relief at the highest rate.

ACCOUNTING AND TAX RETURN SERVICES

Please note that Sara Graff, proprietor of Taxing Nannies, is a qualified Chartered Accountant and Chartered Tax Advisor.  She runs an accounting practice, Sara Graff & Co, alongside Taxing Nannies, providing a variety of accounting and tax services.  She would be happy to assist you in preparing your tax return or assist you with other accounting matters and if you would like further information please ring Sara on 020 8882 6847.

 

 
       
Informing HMRC of a change of name or address06 September, 2010
Informing HMRC of a change of name or address
HMRC have launched a new service which allows taxpayers to notify a change of address or name.  The new service is for individuals only, not for businesses and cannot be used if you have registered for the SA online service or are leaving the UK. The service works by way of an online form which needs to be completed in order to notify HMRC of a change in details.  In order to verify a taxpayer's identity the following information must be provided to HMRC: email address full name, including any middle name(s) National Insurance number date of birth present full postal address - and previous address if you are telling HMRC about a change of address contact telephone number There is a also a list of acceptable proof's of identity, one of which will be required by HMRC to validate an applicant's identity as well as specific requirements depending on whether the application is for a change of name or change of address. HMRC provide the following list of which records (if applicable) will be update...
 
       
Making VAT payments by cheque06 September, 2010
HMRC have issued an important reminder to businesses that continue to make VAT payments by cheque.  In April 2010 HMRC changed the way they treat receipt of VAT payments by cheque.  The change means that the payment date is no longer the day on which the cheque is received but the date on which the cleared funds reach HMRC’s bank account. A cheque typically takes three working days to clear and the cleared funds must be in HMRC’s bank account by the deadline for submission of a VAT return.  Businesses that file VAT returns online must now make payments electronically.  However, smaller businesses that continue to submit paper VAT returns must ensure that cheque payments are sent in good time to clear before the VAT return due date in order to avoid late payment penalties.
 
       
That HMRC 'blunder', P800 letters and ESC A1906 September, 2010
As has been widely reported in the mainstream press, HMRC are currently writing to taxpayers who have paid the incorrect amount of tax through the PAYE system in 2008-09 and/or 2009/10.  Contrary to the views of some commentators there has been no new 'blunder' or 'error'. The PAYE system only ensures that employees pay exactly the right amount of tax every year if they have no benefits in kind, do not change their jobs during the year and have no other sources of income. For all other employees the PAYE system invariably results in under or overpayments of tax each year. In most cases these are resolved through an adjustment to the notice of coding in a later year. This year HMRC have used a new computer program to perform their annual reconciliation faster than usual. The new system has also enabled them to identify how many taxpayers are affected - thought to be approximately 5.7 million taxpayers. Of this number around 4.3 million are thought to be entitled to a tax refund and 1.4 million...
 
       
Updated edition of employer CD-ROM06 September, 2010
An updated edition of the 2010 Employer CD-ROM has been issued and should be used instead of the earlier edition released in February. The updated edition has been designed to ensure compatibility with the new 'Basic PAYE Tools' which will become available next year. The new tools will replace the Employer CD-ROM and HMRC will no longer send out paper employer annual pack and employer CD-ROMs to finalise 2010-11 and start 2011-12. The tools will include: The Employer Database All the calculators Forms to fill in from the database Learning modules Employers can confirm that the update has been successful by checking the home page and confirming that the top right hand corner shows 'September Updated Edition'. 
 
       
Paying income tax by direct debit02 September, 2010
HMRC has posted a warning about a problem in its system which may affect you if you have authorised them to charge direct debits to settle your income tax liabilities. Online amendments to monthly direct debit plans should only be made between the 1st and the 23rd of the month. HMRC is aware of a fault which can stop an amendment made in the final week of the month reaching the taxpayer’s bank. The fault will be fixed and full service restored in April 2011.  
 
       
ACCOUNTING AND TAX RETURN SERVICES03 November, 2009
Please note that Sara Graff, proprietor of Taxing Nannies, is a qualified Chartered Accountant and Chartered Tax Advisor. She runs an accounting practice, Sara Graff & Co, alongside Taxing Nannies, providing a variety of accounting and tax services. She would be happy to assist you in preparing your tax return or assist you with other accounting matters and if you would like further information please ring Sara on +44 (0)208 882 6847.

Please contact Taxing Nannies if you require further information.
 
       
POSTAL STRIKE03 November, 2009
Unfortunately, due to circumstances beyond our control, some correspondence sent to our clients has been delayed or lost in the post. All of our clients should have received by now payslips for the month of September or the week ended 2nd October together with a letter confirming the amount of PAYE and NI due on 19th October. If you have not received this information please contact us without delay.
 
       
CHECKING FOR ILLEGAL WORKERS02 November, 2009
Following the recent case involving Baroness Scotland where she was fined £5,000 for failure to produce a copy of her employee's passport/visa details, we would like to remind our clients to ensure that they check and photocopy documentation to ensure that any prospective employee is legally employed. More information can be found on our website under "employment legislation". Please note that taking the necessary precautions establishes a statutory defence. If you are found to have employed someone illegally you could be fined up to £10,000 per illegal worker and the employee deported.
 
       
MATERNITY PAY AND MATERNITY LEAVE02 November, 2009
We have received several enquiries concerning prospective maternity situations where the employer is concerned about the possibility of a nanny becoming pregnant. We do have information on our website and also a maternity factsheet is available from Taxing Nannies should you require more information. Please note that the employer is able to recover in advance the cost of the gross maternity pay due to a pregnant employee and Taxing Nannies are able to organise the repayment on your behalf.
 
       
PAYMENT OF PAYE AND NI02 November, 2009
From May 2010 you may have to pay penalties if you make more than one PAYE payment late. The amount of the penalty will depend on the number of defaults in any 12 month period. * The first time the taxpayer defaults, they will not receive a penalty; * A second late payment and any subsequent failures in the default period will attract a penalty of 2 per cent of the tax unpaid rising to 5 per cent of tax unpaid; * Further penalties of 5 per cent of any amounts of tax still unpaid at 6 and 12 months; and * Late payment penalties will not be charged during an agreed time to pay arrangement with HMRC unless the taxpayer defaults or misuses the arrangement.
 
       
NATIONAL MINIMUM WAGE RATE01 November, 2009
NATIONAL MINIMUM WAGE RATE
The national minimum wage rate has increased from 1st October 2009 to £5.80 per hour for employees aged 22 and over, £4.83 for employees aged 18-21 and £3.57 for workers aged 16-17. The daily accommodation offset rate has also increased to £4.51 for each day worked. Although au pairs and domestic workers living with a family can be exempted from the minimum wage requirements this is only when they live as part of the family sharing in tasks and leisure activities on the same basis as the family. Therefore most live in nannies are not exempted from the national minimum wage requirements in which case the minimum employers need to pay are the rates stated above less the accommodation offset.
 
       
REDUNDANCY01 November, 2009
Where an employer's situation changes so that they no longer require a nanny, the employee is deemed to be made redundant. Where the nanny has been employed for more than two years redundancy pay is payable at the following rates:

0.5 week's salary for every year worked aged 18-21
One week's salary for every year worked aged 22-40
One and a half week's salary for every year worked from aged 41

From 1st October 2009 the statutory redundancy cap (ie the maximum weekly pay that is required to be made) has increased to £380 gross. More information can be found on www.direct.gov.uk
 
       
ACCOUNTING AND TAX RETURN SERVICES15 April, 2009
Please note that Sara Graff, proprietor of Taxing Nannies, is a qualified Chartered Accountant and Chartered Tax Advisor. She runs an accounting practice, Sara Graff & Co, alongside Taxing Nannies, providing a variety of accounting and tax services. She would be happy to assist you in preparing your tax return or assist you with other accounting matters and if you would like further information please ring Sara on +44 (0)208 882 6847.

Please contact Taxing Nannies if you require further information.
 
       
FILING OF END OF YEAR RETURNS AND HMRC INCENTIVE PAYMENTS15 April, 2009
FILING OF END OF YEAR RETURNS AND HMRC INCENTIVE PAYMENTS
We are filing all our clients' 2008/09 End of Year Returns online and therefore all our clients are eligible for the £75 incentive payment HM Revenue & Customs. Where a tax liability in excess of £75 exists at 5th July 2009, we will 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 will obtain refunds in the form of cheques from the Inland Revenue. This is the last year of incentive payments. However, from 2009/10 it is mandatory for End of Year Returns to be filed electronically.

It is imperative that the information contained on the P35 is correct. HMRC have always had the power to fine for late submission if a P35 was incomplete requiring an amended return to be completed but this was rarely enforced. We now understand that a new penalty regime will result in employers being fined for incorrect or incomplete returns being submitted.
 
       
NEW DISCIPLINARY AND GRIEVANCE PROCEDURES06 April, 2009
On 6th April 2009 the statutory dismissal and disciplinary procedures will be repealed and therefore you will not be required to follow them for "trigger events" occurring on or after that date. However, you will still be required to follow a fair and reasonable procedure as set out in the revised ACAS Code of Practice on disciplinary and grievance procedures. If you unreasonably fail to do so and the issue ends up at an employment tribunal, then the employee's compensation could increase by up to 25%. You can still continue to follow the statutory procedures if you so wish and therefore any existing contracts of employment containing the statutory disciplinary procedures do not have to be altered.

The ACAS statutory Code of Practice provides basic practical guidance on handling disciplinary and grievance procedures and the full code can be found on the ACAS website www.acas.org.uk. ACAS also have a telephone advisory service on 08457 47 47 47.

Taxing Nannies have also produced detailed information on the new disciplinary procedures which can be found on www.taxingnannies.co.uk
 
       
INCREASED MINIMUM STATUTORY HOLIDAY ENTITLEMENT01 April, 2009
From 1 April 2009 the statutory holiday entitlement increases and all workers will have a statutory right to at least 5.6 weeks paid annual leave (i.e. 28 days paid holiday if your employee work five days a week) and this needs to be pro-rated for those working part-time. If the contractual leave is already more than 28 days no change needs to be made to the contract of employment.

There is no statutory right to be paid leave on bank and public holidays. If paid leave is given on a bank or public holiday, this can count towards the minimum entitlement of 5.6 weeks. If a full time employee is entitled to 20 days holiday plus bank holidays then this can continue. However, if a part-time employee is entitled to 4 weeks holiday pro rated plus bank holidays this must equate to the equivalent of 5.6 weeks pro-rated.
 
       
CORRECT POSTAGE09 August, 2008
Although the Royal Mail changed their pricing structure some time ago, some of our clients are still sending large letters through with the wrong postage. We would request you to please check the amount carefully before sending any large letters as incorrect postage can result in delays in us receiving your post from you as well as Taxing Nannies incurring administrative costs from Royal Mail as well as the excess postage.
 
       
ACCOUNTING SERVICES AND TAX RETURN SERVICE08 August, 2008
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 2008 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 020 8882 6847.
 
       
NATIONAL MINIMUM WAGE07 August, 2008
Please note that from 1 October 2008 the national minimum wage increases to £5.73 gross per hour for anyone aged 22 and over and £4.77 gross per hour for those aged 18 to 21. The minimum rate for 16-17 year olds is £3.53 per hour.

The minimum wage is not considered to apply to a nanny who lives with the family as part of the household. However, it is generally thought that where the employee earns over the lower earnings threshold that they should be subject to the minimum wage requirements. Where the nanny has separate accommodation then the national minimum wage will apply subject to an offset of £4.46 per day for each day that accommodation is provided.
 
       
CHANGE IN PERSONAL ALLOWANCES05 August, 2008
Further to the Chancellor's announcement following the protests regarding the abolition of the 10% tax code, the basic Personal Allowance for the 2008-09 tax year is increasing by £600 from £5,435 to £6,035 and the basic rate limit is reducing from £36,000 to £34,800. This will take place with effect from 7th September 2008.


As a result, many employees will see their tax code change in September. Those employees who get paid gross will see their salaries in September increase by up to £60 and £10 per month thereafter until the end of the tax year. Those employees who receive a net salary will not see any change to their salary but the tax liabilities of the employers will decrease by a similar amount.


Whether the full amount of £60 is received in September will depend on whether an employee has a cumulative tax code or a week 1/month 1 tax code. For most employees who have worked since the beginning of the tax year, the tax code is likely to be cumulative unless subsequently amended by HM Revenue & Customs. However, for those employees who have started during the tax year and have not produced a P45 when commencing employment or where a nanny share has commenced, they are likely to have a week 1 tax code. Employees may apply to their local tax office for their affairs to be reviewed either in September or April but any refund will be made to the employee and not the employer.

Please contact Taxing Nannies if you require further information.
 
       
NATIONAL MINIMUM WAGE09 October, 2007
NATIONAL MINIMUM WAGE
Please note that from 1 October 2007 the national minimum wage increases to £5.52 gross per hour for anyone aged 22 and over and £4.60 gross per hour for those aged 18 to 21. The minimum rate for 16-17 year olds is £3.40 per hour.



The minimum wage is not considered to apply to a nanny who lives with the family as part of the household. However, it is generally thought that where the employee earns over the lower earnings threshold that they should be subject to the minimum wage requirements. Where the nanny has separate accommodation then the national minimum wage will apply subject to an offset of 4.15 per day for each day that accommodation is provided.

Please contact Taxing Nannies if you require further information.
 
       
ACCOUNTING SERVICES AND TAX RETURN SERVICE07 October, 2007
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 2007 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 020 8882 6847.
 
       
APPROVAL OF NANNIES FOR ENTITLEMENT TO CHILDCARE VOUCHERS01 October, 2007
The registration process for approving nannies is changing from 1st October 2007 and "The Childcare Approval Scheme" no longer applies. Instead, there is voluntary registration to the Ofsted Childcare Register.

The registration requirements for this body are as follows:

1. The applicant will need to demonstrate suitability.
2. The applicant will be required to apply for a CRB check and have their identity checked at a local post office
3. A certificate may be required where the applicant has lived abroad wihin three years of making the application.
4. Ofsted will seek confirmation from applicants that they are not disqualified from providing childcare.
5. The applicant will be required to hold a current first aid certificate
6. Applications can be made in writing to Ofsted, National Business Unit, Royal Exchange Buildings, St Ann's Square, Manchester, M2 7LA, by phone on 08456 404040 or online on https://online.ofsted.gov.uk/OnlineOfsted/default.aspx
7. The current cost is £100 but after April 2008 there will be a charge of £36 for the CRB check and a further £8 adminstration fee.
 
       
INCREASED MINIMUM STATUTORY HOLIDAY ENTITLEMENT01 October, 2007
From 1 October 2007 the statutory holiday entitlement has been changed and all workers now have a statutory right to at least 4.8 weeks paid annual leave (ie 24 days paid holiday if your employee work five days a week) and this needs to be pro-rated for those working part-time. If the contractual leave is already more than 24 days no change needs to be made to the contract of employment.

The minimum statutory holiday entitlement will increase again to 5.6 weeks from 1 April 2009 (ie 28 days for a five day week). There is no statutory right to be paid leave on bank and public holidays. If paid leave is given on a bank or public holiday, this can count towards the minimum entitlement of 4.8 weeks.
 
       
ACCOUNTING SERVICES AND TAX RETURN SERVICE12 April, 2007
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 2007 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.
 
       
CHILDCARE VOUCHERS11 April, 2007
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. Up until now the Childcare Approval Scheme has been the voluntary scheme for approving childcare providers and enabling parents and employers to check if a carer is approved. However this approval scheme is being phased out and from 1st October 2007 applications and renewals by nannies will be dealt with by Ofsted by voluntarily registering to the Ofsted Childcare Register (OCR). Between April and September 2007 nannies can be approved by either body. For more information on approved childcare please contact Taxing Nannies or visit www.childcareapprovalscheme.co.uk/carer/qualifications.asp or https://online.ofsted.gov.uk/OnlineOfsted/default.aspx
 
       
EU WORKERS11 April, 2007
Workers from most EU countries can work without any need for a work permit. If the EU is from one of the Eastern European countries then if they have worked in the UK for less than a year they will be required to register with the Home Office within 30 days of starting each employment. However, it is important to note that Romanian and Hungarian Nationals cannot be employed until a work permit is obtained by the employer and the foreign national has received an Accession Worker Card.
 
       
HOLIDAY ENTITLEMENT11 April, 2007
The Government have issued proposals to increase minimum statutory holiday entitlement to 24 days (including bank holidays) from October 2007 increasing to 28 days in October 2008. We will advise you further once the proposals have been confirmed.
 
       
INLAND REVENUE INCENTIVE PAYMENTS11 April, 2007
We have filed all our clients' 2006/07 End of Year Returns online and therefore all our clients are eligible for the £150 incentive payment from the Inland Revenue. Where a tax liability in excess of £150 exists at 5th July 2007, we will 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 2007/08 is reduced to £100 and £75 for 2008/09.
 
       
STATUTORY MATERNITY PAY11 April, 2007
For babies due after 1st April 2007, SMP has increased from 26 weeks to 39 weeks. The rate will continue to be 90% of average salary for the first 6 weeks and will be at the rate of £112.75 per week for the remaining 33 weeks. Please also note that employees on maternity leave accrue holiday pay and therefore if an employee resigns at the end of her maternity pay period she will be entitled to holiday pay based on 9 months service.
 
       
NATIONAL MINIMUM WAGE10 April, 2007
NATIONAL MINIMUM WAGE
Please note that the current national minimum wage is £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 £3.30 per hour. These figures will increase on 1st October 2007 to £5.52, £4.40 and £3.40 per hour respectively. 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 per day for each day that accommodation is provided.

Please contact Taxing Nannies if you require further information.
 
       
ACCOUNTING SERVICES AND TAX RETURN SERVICE08 September, 2006
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.
 
       
EMPLOYMENT STATUS08 September, 2006
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
 
       
INLAND REVENUE INCENTIVE PAYMENTS06 September, 2006
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.
 
       
CHILDCARE VOUCHERS02 September, 2006
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
 
       
NATIONAL MINIMUM WAGE01 September, 2006
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.
 
       
ACCOUNTING SERVICES AND TAX RETURN SERVICE11 September, 2005
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 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.
 
       
INLAND REVENUE INCENTIVE PAYMENTS03 September, 2005
We have filed all our clients' 2004/05 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 2005, 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 have, to date, been unable to obtain a refund from the Inland Revenue. This is due to problems with the Inland Revenue's computer systems resulting in the majority of End of Year Returns not yet having been processed. Until this happens they will not authorise a refund. We apologise for any inconvenience this has caused.
 
       
WORKING TAX CREDIT03 September, 2005
We have been advised by the Tax Credit Office that from 7 November 2005 all new claimants of Working Tax Credit will be paid direct from the Tax Credit Office and that employers will cease to pay all tax credits through the payroll by 31st March 2006.

If you pay your nanny Working Tax Credits through the payroll you need to write to your employee stating the following:

"Payment of Working Tax Credit through the pay packet is being phased out between 7 November 2005 ad 31 March 20006. Instead the money will be paid directly to Working Tax Credit claimants by HM Revenue and Customs (HMRC).

Sometime between 7 November 2005 and 31 March 2006 HMRC will tell me to stop paying Working Tax Credit with your pay. HMRC will also be writing to you to explain the change. HMRC will pay the Working Tax Credit to which you are entitled direct into the bank, building society, or Post Office card account you have told them about (either on your claim form or at a later date). If you have not given them your account details, they will tell you what to do. You will not lose money as a result of this change.

The money paid to you will usually appear on your bank, building society, or Post Office statements as "Working Tax Credit" or "Working & Child Tax Credit". If neither of these are shown, your payments may be shown as Direct Credit. If you have any questions please phone HMRC n 0845 300 3900."
 
       
CHILDCARE VOUCHERS02 September, 2005
We have been contacted by clients enquiring about childcare vouchers. These vouchers need to be provided by your employers and can be used as part of a salary sacrifice scheme or given as an addition to your salary. A childcare voucher scheme can be set up quite easily by a company but there are various criteria including the scheme being available to all employees.

If your employer gives you childcare vouchers, the first £50 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 £50 per week free of tax and national insurance. For a basic rate tax payer the tax and national insurance savings on £50 per week amount to £16.50 per week and for a higher rate tax payer the relief amounts to £20.50 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.
 
       
NATIONAL MINIMUM WAGE01 September, 2005
Please note that with effect from 1 October 2005 the national minimum wage is rising to £5.05 gross per hour (£5.35 from 1 October 2006) for anyone aged 22 and over and £4.25 (£4.45 from 1 October 2006) gross per hour for those aged 18 to 21. The minimum rate for 16-17 year olds is remaining for the time being at £3.00 per hour. Please contact Taxing Nannies if you require further information.
 
       
APPROVED CHILDCARE01 February, 2005
Many of you have read in the press about the tax breaks that the Government are bringing in from April 2005 to assist with "registered" childcare which is to include nannies. Until recently however, there were no guidelines as to what constituted "registered" childcare (now known as approved childcare for nannies working in your home).

There are basically two types of relief that will be available. Firstly, for families with an income of under £59,000, childcare tax credit will be available to assist with the cost of using an "approved" nanny from April 2005 as part of working tax credits. For further information on whether you qualify you can visit www.taxcredits.inlandrevenue.gov.uk

Secondly if your employer gives you childcare vouchers, with effect from 6th April 2005, the first £50 per week per employee will be exempt from tax and national insurance (and employer's national insurance) provided registered or approved childcare is used. If both parents receive childcare vouchers they will each be entitled to receive £50 per week free of tax and national insurance. For a basic rate tax payer the tax and national insurance savings on £50 per week would amount to £16.50 per week and for a higher rate tax payer the relief would amount to £20.50 per week. Childcare voucher schemes can be used as part of salary sacrifice scheme or given as an addition to salary. A childcare voucher scheme can be set up quite easily by a company but there are various criteria including the scheme being available to all employees.

The Childcare Approval Scheme is a voluntary scheme for approving childcare providers and enabling parents and employers to check if a carer is approved. An organisation called Nestor has been chosen to act as the approval body on behalf of the Department for Education and Science and they will provide the approval service.

1. The nanny has to apply for approval herself and she can apply immediately although no approval will be effective before 6th April 2005.

2. In order to apply she must ensure that she has the relevant qualifications, or has attended an approved induction course. Details of the qualifications accepted and the induction courses available can be found on www.childcareapprovalscheme.co.uk/carer/qualifications.asp. For nannies from abroad, they will have to provide evidence from a verifiable source and if necessary have that evidence translated into English by an accredited translation agency, Embassy or High Commission. In view of the time it may take to verify the evidence, it may be easier to attend an acceptable induction course, details of which can be found on the above website.

3. The nanny must also hold a certificate in first aid that is suitable to the care of babies and children and is not more than three years old at the time of approval (e.g. dealing with emergencies, resuscitation, shock, choking and anaphylactic shock).

4. The nanny must complete an application form which can be found on www.childcareapprovalscheme.co.uk/application.asp. It then needs to be sent to Childcare Approval Scheme, 2nd Floor, Westbury House, 23/25 Bridge Street, Pinner, HA5 3HR.

5. There is an annual fee of £96 which can be paid by debit card or credit card by telephoning 0845 767 8111. This covers a CRB enhanced check being carried out which also includes a Protection of Children's Act list check.

For further information on the scheme please contact 0845 767 8111 or visit www.childcareapprovalscheme.co.uk
 
       
ACCOUNTING SERVICES02 October, 2004
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 or assist you with other accounting services 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.
 
       
CHILDCARE VOUCHERS01 October, 2004
You may have read in the press over the last few months about the government initiative for employers to assist employees with childcare costs by providing childcare vouchers. Currently childcare vouchers are exempt from National Insurance Contributions for employees so therefore they are of limited help for higher rate employees whose marginal rate of National Insurance is only 1%. However, from April 2005, childcare vouchers to the value of £50 per week will be exempt from both Income Tax and National insurance but will only apply to registered childcare.

Nannies will be able to be registered from April 2005, but unfortunately the criteria for registration will not be released until January 2005. We will inform you as soon as the regulations are published.
 
       
NEW LEGISLATION CAME INTO FORCE ON 1ST OCTOBER 2004 WHICH AFFECTS ALL EMPLOYERS - PLEASE READ THE FOLLOWING CAREFULLY!01 October, 2004
The Employment Act 2002 (Dispute Resolution) Regulations came into effect on 1st October 2004 which give new rights and responsibilities to employers and employees with regard to dismissal and disciplinary procedures. This applies to all employers and employees who have been employed for more than a year.

The procedures that should be adopted when an employee is not performing satisfactorily are as follows:

1. Informal warning - an informal discussion to try and rectify the problem. A note should be made of the date on which the issue was discussed and what action was agreed.

2. Formal warning - If the problem persists the employee should be invited to a meeting for a formal discussion. The employee is entitled to be accompanied by a colleague or trade union representative (although this is unlikely to be relevant for most of our clients). After the formal meeting a final written warning should be given that failure to improve or modify behaviour may lead to dismissal and it should refer to the right of appeal.

There is now a minimum 3-step procedure that must be followed before resorting to a tribunal. This process should be resorted to after the above warnings.

1. Put it in writing - You must send the employee a written explanation of the conduct, capability or other circumstances that have led you to think about taking dismissal or disciplinary action against them. This is in addition to the written warning referred to above. Similarly an employee must put any reasons for their grievance in writing.

2. Meet and discuss - you must invite the employee to a meeting to discuss the issue. After the meeting you should inform the employee of your decision and offer them the right to appeal.

3. Appeal - If the employee wishes to appeal, they must inform you. You must then invite the employee to a second meeting to discuss the appeal. Following the appeal meeting you must give your final decision.

In exceptional circumstances, where an employee is dismissed following a case of gross misconduct, the dismissal procedure can be modified to a two-step process as follows:

1. Put it in writing - Send the employee written explanation of the alleged misconduct that led to their dismissal - including evidence for this decision and the employee's right to appeal.

2. Appeal - if the employee wishes to appeal, they must inform you. You must then invite the employee to a meeting to discuss the appeal and following the meeting give your final decision.

As part of the new law it is your duty to fully inform your staff of their new rights and procedures that must be followed and where they can find these new changes. You can direct them to www.dti.gov.uk/resolvingdisputes if you wish which is a very informative website on the subject.

The 3 step process must also be set out in either an initial offer letter, written statement of employment particulars, a contract of employment or in a written statement of change.

If a dispute reaches tribunal and one of the parties has not followed the above procedures in full, they will face penalties. The dismissal will become automatically unfair, and a mandatory minimum of four weeks' pay will be awarded to the employee. Any additional compensation will be increased by a minimum of 10% up to a maximum of 50%. If an employee fails to comply with the new process, any award they receive will be reduced between 10% and 50%.

If you have a contract that we have drafted for you, please will you contact us so that we can issue you with a statement of the new changes.
 
       
TAX RETURNS04 May, 2004
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 or assist you with other accounting services 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.
 
       
NATIONAL MINIMUM WAGE03 May, 2004
Please note that with effect from 1st October 2004 the national minimum wage will rise to £4.85 (currently £4.50) gross per hour for anyone aged 22 and over and £4.10 (currently £3.80) gross per hour for those aged 18 to 21. A rate for 16-17 year olds will also be introduced of £3.00 per hour. Please contact Taxing Nannies if you require further information.
 
       
FILING OF ONLINE TAX RETURNS01 May, 2004
Taxing Nannies now has the technology in place to file employers' end of year returns online and will be doing so for all its clients for 2004/05 onwards. This will enable our clients to obtain the following incentive payments:

April 2005 £250
April 2006 £250
April 2007 £150
April 2008 £100
April 2009 £75
Therefore anyone using Taxing Nannies during 2004/05 and 2005/06 will in effect have their fees paid for by the Inland Revenue.

The full incentive payments of £825 will be eligible for anyone who is an employee from 2004/05 to 2008/2009.

Filing online requires certain administrative procedures to be adopted and we will be contacting all our existing clients shortly to obtain the necessary authorities to enable us to file your return online.

Also stringent Inland Revenue requirements mean that in order to be able to file online we need full details of all employees such as address, postcode, date of birth and national insurance number.
 
       
IMPORTANT NEW LAWS FOR EMPLOYERS (TO PREVENT ILLEGAL WORKING)01 May, 2004
The Asylum and Immigration Act 1996 makes it a criminal offence to employ someone who has no right to work in the UK. It also gives employers a statutory defence against conviction for employing an illegal worker. This is done by checking and copying certain original documents belonging to your employee.

On 1st May 2004 new rules came into effect. These are as follows:

You need to obtain certain documents from all potential employees (whether you believe them to be British or not) Failure to do this for all employees could result in prosecution under the Race Relations Act. The main documents that must be produced are:

EITHER - any one of the following:
1. A passport showing that the holder is a British citizen, or has a right of abode in the UK or
2. A passport or identity card showing that the holder is a national of an EU country or Switzerland or
3. A passport or travel document showing that the holder can stay indefinitely in the UK or a travel document containing an endorsement to allow the holder to carry out the work being offered.

OR - two of the following:
1. An official document showing the employee's permanent national insurance number

AND
1. A full birth certificate issued in the UK or channel Islands, Isle of Man or Ireland which includes the names of the holder's parents or
2. A certificate of registration or naturalisation stating that the holder is a British citizen or
3. A letter or Immigration Status Document issued by the Home Office which indicates that the person can stay indefinitely in the UK or can do the type of work being offered

OR
1. A work permit together with a passport or travel document or letter from the home Office endorsed to show that the holder is able to take the employment in question.

You need to satisfy yourself that your potential employee is the rightful holder of any of the documents they present to you and to make a photocopy or a scan of the following:

a) The front cover and pages containing the employee's personal details, photograph and signature
b) Any page containing a UK stamp or endorsement

Taking the above precautions will establish a statutory defence. If you are found to have employed someone illegally you could be fined up to £5,000 and the employee deported.

If you employ someone after 1st May 2004 from the new EU countries (excluding Cyprus and Malta) you will also need to ensure that they register with the home office within 30 days of commencing employment.. The countries are CZECH REPUBLIC, ESTONIA, HUNGARY, LATVIA, LITHUANIA, POLAND, SLOVAKIA AND SLOVENIA. Failure to do so could result in a fine of up to £5,000.

You will need to provide them with evidence of their employment and keep a copy of the completed application form which you must keep until you receive notification from the Home Office that the employee has been registered. You will then receive a registration certificate.

For further information please visit www.ind.homeoffice.gov.uk or www.workingintheuk.gov.uk or you can ring the employers' helpline on 0845 010 6677.
 
       
TAX RETURNS05 November, 2003
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.
 
       
FILING OF ONLINE TAX RETURNS01 November, 2003
Many of you will have received through the post information from the Inland Revenue regarding online filing of PAYE returns (forms P35) and the incentives being offered by the Inland Revenue to employers to file online. To clarify this matter please note the following:

1. Incentive payments do not come into force until the filing of the 2005 tax return. Forms P35 can be filed online for 2004 but no incentive payments will be made by the Inland Revenue.

2. The Inland Revenue are advertising incentive payments in the sum of £825. Although this is strictly correct, payments totaling this amount will only be paid if you are still employing someone in April 2009.

3. The incentive payments to be made are as follows:

April 2005 £250
April 2006 £250
April 2007 £150
April 2008 £100
April 2009 £75

Taxing Nannies is expecting to have the technology in place by April 2004 to file tax returns on line, well in time to be able to file 2005 tax returns. We will be able to file tax returns online with the result that our clients will obtain the incentive payments. Therefore anyone using Taxing Nannies during 2004/05 and 2005/06 will in effect have their fees paid for by the Inland Revenue.

Filing online requires certain administrative procedures to be adopted and we will be contacting you next summer to obtain the necessary authorities to enable us to file your return online.
 
       
NATIONAL MINIMUM WAGE01 November, 2003
Please note that with effect from 1st October 2003 the national minimum wage is £4.50 gross per hour for anyone aged 22 and over and £3.80 gross per hour for those aged 18 to 21. The rates vary slightly where a nanny lives in as there is a small adjustment that can be made to take account of the accommodation costs. Please contact Taxing Nannies if you require further information.
 
       
TAX RETURNS10 April, 2003
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.
 
       
NATIONAL INSURANCE CONTRIBUTIONS06 April, 2003
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 CREDITS02 April, 2003
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.
 
       
TAX RELIEF FOR CHILDCARE02 April, 2003
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.
 
       
NANNY COMPANY SCHEMES01 April, 2003
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.