How do I employ a nanny?

[colinjo]

Hi,

My wife and I want to change our childcare arrangements from crèche to nanny. The children will be cared for in our home not the nannies.

We want this to be legit from a taxation perspective and see the following options available to us:

1. employ her directly by becoming her employer
2. employ her indirectly via an agency
3. pay her directly assuming she becomes self employed

Are there other viable options to hiring a nanny?

We are currently leaning towards option one.

My wife and I are both PAYE workers, can anyone advise how to become her employer? Are there any perks to being her employer from a tax perspective i.e. can we claim any of the expense back?

Thanks,
Colin

 

[ubiquitous]

Revenue have stated not too long ago that the vast majority of cases, they will not accept arrangements where the nanny is treated as self-employed

Are there any perks to being her employer from a tax perspective i.e. can we claim any of the expense back?

No. Most certainly not.

 

[colinjo]

Thanks Ubiquitous.

Do you know the steps I need to follow to become her employer?

 

[ramble]

I employed a nanny recently. You need to fill out a tax registration form to obtain an employer number. This can be ordered on line. The nanny will need to provide you with her P45 and you send this to the revenue who will then issue you with a certificate of tax credits. Until you get this you have to calculate deductions on an emergency tax basis. The revenue send you a book which explains how to do this but unfortunately does not contain up to date prsi rates which you have to get from the Department of Social and Family affairs website. YOu then pay tax and prsi to the collector general every month. They send you a letter and credit transfer every month so you don't forget. The employers helpline is useful - number in the book but it takes a bit of explaining that you don't want vat registration and that you don't have a business.

YOu should also get a summary of employment law so you get holidays and bank holidays right. Oasis or a citizens information centre should provide this.

The most annoying part of the process was the assumption by everyone - government included that this is a mad thing to do. The CSO sent me a form, which you are legally obliged to fill out, which requests details of the business which you are running. I ignored it the first time because it clearly didnt apply to me, then they send me a threatening letter so I had to write back to them explaining that I couldn't answer any of the questions because I didn't have a business, just a nanny.

 

[colinjo]

Just realised that apart from paying gross salary I need to pay an additional 10.75% for employer's PRSI , which makes me think I may be better off hiring the nanny through an agency which will typically cost an additional 10% + VAT. For the additional cost I wouldn't have the hassle of becoming an employer and would hopefully have backup if the nanny was ill.

What made the nanny option preferable for you?

 

[ramble]

I found the agencies useless ! Also the VAT rate is 21%. If you employ someone yourself you are more in control and can build up a better relationship with the nanny. If the agency is messing the nanny about you could loose the nanny through no fault of your own.

I got a nanny because my kids are very spread out in age with the older 2 being 11 and 14. There was no way they were going to a minder, I had been working around their school hours with a creche for younger children and a cleaner. But I was exhausted and the cost was not much less than a nanny. Because all of my children are now at school the nanny is really a housekeeper/nanny. She does shopping, cooking, light housework and laundry, school collection etc. Choosing the nanny was quite difficult, I interviewed some women who would have been great for the small kids but would have driven the older 2 crazy ! 6 Months in its working out well.