Nanny Tax Calculator

The Nanny Tax Calculator is used to calculate how much money you can take home after deductions. It accepts a gross amount and returns a breakdown including all deductions, including employer contributions, and displays the net salary you can expect to take home (take-home pay).

How the Nanny Tax Calculator works

If you are an employer or an employee, it will work either way. Currently the calculator takes into account a gross salary, tax code, student loan, auto-enrolment pension contributions (workplace pension) scheme, and also the frequency of pay. It will return a net salary, minus all deductions.

Don’t let Nanny Tax be more complicated than it needs to be

Due to the amount of tax rules and regulations, time-constraints and a range of factors—ultimately people are busy living their lives and working hard—we can’t all be accountants, and why should we be? I created the Nanny Tax Calculator, to alleviate, and provide for free, the means to calculate a Nannies salary based on genuine HMRC based rates, thresholds, and fees.

Understand the difference between gross and net pay

If you are a Nanny you are most certainly better off agreeing a gross figure with your employer. The gross figure is what you are paid before deductions such as student loan repayments and national insurance, the net is what you are left with after all deductions have been accounted for.

Do nannies have to pay National Insurance?

The short answer is, yes. This rule applies whether you are self-employed or not, there’s no escape, unless you become an employee of your own Ltd. company, as a contractor, which in most cases could be excessive, however, if you are running your own company and employing nannies then it will be your responsibility to pay the required National Insurance.

How does Nanny PAYE work?

It’s the same for any employer, if a nanny is an employee and you are paying them you must contribute to the state through the PAYE scheme. This is how you declare the Tax and NI you pay your nanny. If a nanny is paid less than £120.00 per week, don’t receive benefits or claim expenses, there is no need to register for PAYE, you must keep payroll records instead.

How do tax codes work?

The nanny tax calculator accepts the following tax codes:

LettersWhat they mean

LYou’re entitled to the standard tax-free Personal Allowance, also the default

MYou’ve received a transfer of 10% of your partner’s Personal Allowance

NYou’ve transferred 10% of your Personal Allowance to your partner

0TYour Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code

D0All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)

D1All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)

If you choose not to enter a tax code the default (1250L) will be applied. 1250L is the tax code currently used for most people who have one job or pension.

Student loan repayments can also be take into account

The Nanny Tax Calculator accepts 3 student loan repayment plans, ominously they are called: plan 1, plan 2 and Postgraduate loan.

Include pension contributions from an employer and employee perspective

When you opt-in to include pension contributions you will see the output for the typical workplace pension, also known as auto-enrolment, this is where an employee is automatically given a pension that you the employee and employer contribute towards, with a very small amount of tax relief contributed by HMRC.