Congratulations to the Duke and Duchess of Cambridge on their new arrival! And commiserations perhaps to the royal nanny, Maria Borrallo, who has just seen her current workload increase by 50%.
According to my quick perusal of this morning’s headlines, the Cambridge household won’t be engaging any more staff. Perhaps they don’t need to: Ms Borrallo is a top-flight Norland nanny from the college in Bath of the same name. Established in 1892, Norland nannies are famed for their somewhat unflattering brown uniforms and for having learned skills such as self-defence and paparazzi avoidance as well as childcare.
With HRHs George and Charlotte now at school, there should be some slack in the schedule. Still, with a newborn in the equation, Ms Borrallo will have to martial all her arts (pun intended) to keep the various plates spinning. I hope she’s got a massive pay rise.
All of which is a reminder for those employing nannies, housekeepers, carers or other staff to double-check that salaries and benefits are in line with this month’s changes.
The national living wage (for age 25 and over) has risen from 1 April this year from £7.50 to £7.83 an hour. Rates for younger people are slightly less but they have also increased. As an employer, you are legally obliged to comply with the schedule.
The same goes for pensions. Nannies and other domestic staff are, in the main, eligible to receive pension contributions from an employer. Last year, the required amount was 1% of salary. Since 6 April this year, it’s gone up to 2%. Nanny must now also save 3% of her (or his) pre-tax earnings, up from 1% last year.
The rules are different for au pairs who are treated as family members. Wages are lower and a pension is not required, making this potentially more cost-effective childcare. See the government explanation here.
Providing a pension (which will rise to 3% of salary in employer’s contributions from April 2019) adds considerably to the overall cost of hiring a nanny and should be factored into any calculations.
In fact, sorting out payroll, tax and benefits for a single employee is a massive headache and one which is well worth outsourcing. For many years, I have used a company called Nannytax which has taken the strain off the Minted family’s abacus. They send a monthly payslip which tells you how much to pay your nanny, the tax deducted, what (and when) to pay HMRC and keep you updated on changes in regulation, minimum wage, tax and so. This costs £276 a year with the pension service an extra £69. Similar companies include PAYE for Nannies and Nanny Matters.
Payroll seems an unnecessary expense until you consider the penalties for getting it wrong. They can be severe, especially for non-payment of pension contributions. More importantly though, the staff you employ are looking after your children/loved ones. It’s worth looking after them.
See our SMM guide to workplace pensions here.