Paying Tax for my Mum

Smurggle

Hi there,
I need some help on paying tax for my mum, I employ her as a nanny and until abot 30 minutes ago I had no idea I had to register as an employer (which I will be doing straight away), she lives with us for 5 days a week to look after my son and I pay her 500 a month into her bank account. I know that I can't pay her in childcare vouchers (the government wouldn't want family looking after children after all!:rolleyes:) which means that we struggle to pay her as much as we do, but I was wondering whether we need to pay her national insurance contributions? And how much this would be, I know she is under the limit but I am worried about her not getting a state pension, does anyone have any ideas? Or know how much would have to be paid by us if she was just over the limit?

Thanks in advance

firesidemaid

how old is your mum and what other income does she have?

Smurggle

Hiya,
my mum will be 50 in December and she has no other income, she is married and lives with her husband for the rest of the week. He is in full time employment but I don't know whether that makes any difference.

Cheers

trevormax

If your mother was willing to do the training and become a registered child minder, then look after your children in her own house, you could claim 80% of the costs on tax credits (providing your income isn't too high to wipe out the amount). Something worth considering.

http://www.kirklees.gov.uk/answers/childcare/becomingchildminder.shtml this site gives details on what is needed to become a childminder.

Smurggle

Hi there, unfortunately my mum lives in Stafford at the weekend and with us in south Wales during the week so she can't look after my son in her own home, I wish there was a way around it.

I've read that employers' NI contribution is 11%, does anyone know if this is 11% on anything above £6000 or for everything that is earnt?

Thank you

Lokolo

Smurggle wrote: »

Hi there, unfortunately my mum lives in Stafford at the weekend and with us in south Wales during the week so she can't look after my son in her own home, I wish there was a way around it.

I've read that employers' NI contribution is 11%, does anyone know if this is 11% on anything above £6000 or for everything that is earnt?

Thank you

HEY! Happy times in Stafford!

Anyway I think NI is above £90 or something a week....

http://www.hmrc.gov.uk/RATES/nic.htm

tsstss7

Surely if you are employing your mum you would be expected to pay minimum wage?

AFAIK it is possible for a nanny to be registered so that you can claim tax credits so I would look into it if I was you.

Alternatively couldn't your mother register as a childminder based at your home. She could even take on another child or two and make a bit of extra money if you didn't object to having other children in your home.

On the question of NI etc tax and NI becomes payable on a wage of just over 100/wk (might be nearer to 120 now) tax comes out of your mothers wage as does most of the NI but there is also an employeres contribution which varies according to the wage paid. It might be worth noting that holiday pay is statutory also!!

This web site might be useful :-

http://www.hmrc.gov.uk/nic/

Smurggle

Hi there, thanks for your replies, I'll keep checking it out and try to start paying her NI. Minimum wage is not applicable if someone is living as a member of your family, i.e she is getting bed and board (aand a nice home cooked meal every night I might add!) I can't pay her with childcare vouchers because there is a rule that states that if it is a member of your family looking after your child in your own home (even if she is registered as a child minder or nanny) then you can't claim the tax back- it's a rule that really makes me angry as all I want if for my son to have the next best thing to having me at home. Anyway I think we have decided that we will pay her a little more and make sure that NI is covered, thanks for you help.

tsstss7

Smurggle wrote: »

Hi there, thanks for your replies, I'll keep checking it out and try to start paying her NI. Minimum wage is not applicable if someone is living as a member of your family, i.e she is getting bed and board (aand a nice home cooked meal every night I might add!) I can't pay her with childcare vouchers because there is a rule that states that if it is a member of your family looking after your child in your own home (even if she is registered as a child minder or nanny) then you can't claim the tax back- it's a rule that really makes me angry as all I want if for my son to have the next best thing to having me at home. Anyway I think we have decided that we will pay her a little more and make sure that NI is covered, thanks for you help.

Hi smurggle

I guess that makes sense (about min wage) as you are providing over and above the wage.

I tend to agree with you about the tax credits/vouchers situation as I would prefer to have a family member look after my LO when I go back to work also, but as it stands witout tax credit help I couldn't afford to go back to work and my mum needs an income too so can't do it for free (so will be looking for nice childminder). I suppose the gov't can't bring it in as a policy because it would cost too much - I can't imagine how many grandparents/aunts/uncles etc provide free or cheap childcare at the moment but it must be huge I know at least half of my friends with kids that work have childcare provided by family and one grandma even does full time for nowt!

Elaine_Wilson

For a contribution year to qualify towards the basic pension she will need to earn more than the Lower Earnings Limit. At the moment this is £4,680 a year.

The funny thing is that earnings over this amount (which equals £390 a month) up to £455 per month incur national insurance at a rate of 0%!

Any earnings over £455 and she would have to pay 11% on the excess.

As the employer you would pay 12.8% of that excess as well.