Can after school nanny be self employed?

orangeslimes

Uncertain wrote: »

There are two other ways round this.....

If the nanny really wants to be self employed she could become a limited company (Mary Poppins Ltd !!) then invoice for her services. As far as I know this is 100% watertight.

It's not 100% watertight, and probably not a good idea from her perspective anyway.

A compromise is if she registers for VAT (you can register voluntarily below the compulsory turnover figure). Normally this means that she would be regarded as a "proper" business for tax purposes and thus protect the client (i.e employer).

The problem is I suspect she would see both as too much hassle.

I don't think this will help either, and it is pointless if the nanny is only earning a small amount.

The relevant thing is whether she is treated as an employee or not, as other people have said.

Uncertain

LittleVoice wrote: »

By registering her business for VAT, she would then have to add VAT to her charges. So, without increasing what the client family pay, she would have to reduce her nett income to 80% of what she is charging - and still be liable for tax on the profit.

She could of course reclaim VAT from her expenses (petrol, uniform, parasol, hat stand, bag etc !!!) so this would effectively increase her profits so she wouldn't need to pass the full 20% on to earn the same bottom line.

Also, are nanny service rated at 20% (not sure)!

I suspect this is getting a bit theoretical!

Uncertain

orangeslimes wrote: »

It's not 100% watertight, and probably not a good idea from her perspective anyway.

Really?

I would be very interested in any references to situations where this has not worked as a friend is in the process of doing just that (i.e limited company) for a similar situation in a different field.

Thanks

EconomicsGirl

Just tried on the HMRC website employment status indicator and it came out as self-employed. Quite surprised given what I've read but it seems to be mainly as she'll be providing her own car which she'll use to pick up our kids in and won't claim expenses for this and as she can substitute a nursery worker in her place. HMRC say this is binding if you print it out which I have done but I'm still phoning and checking as if its wrong we're liable for a lot of tax. Thanks for all the help.

kingfisherblue

If she is self employed, she will need to have Public Liability Insurance - I suggest that you ask for a copy of the certificate. If she employs somebody else (for example, to cover her if she is off sick or on holiday), she will need Employer's Liability Insurance. Again, I would be inclined to ask for a copy of the certificate. This is to ensure that your child is covered by her insurance should something occur when in her care, and also if something happens to her employee - you wouldn't want to be held liable. I believe that as an employer she would need the above two insurances by law, as a minimum.

ohreally

Uncertain wrote: »

She could of course reclaim VAT from her expenses (uniform, parasol, hat stand, bag etc !!!)

I suspect this is getting a bit theoretical!

Theatrical, even.

LittleVoice

Uncertain wrote: »

She could of course reclaim VAT from her expenses (petrol, uniform, parasol, hat stand, bag etc !!!) so this would effectively increase her profits so she wouldn't need to pass the full 20% on to earn the same bottom line.

Also, are nanny service rated at 20% (not sure)!

I suspect this is getting a bit theoretical!

Theoretcial indeed.

VAT she had paid would be deducted from VAT she had charged.

Even allowing for that, as her business's expenses would have to be less than her fee (otherwise she would be operating at a loss whether or not she was registered for VAT) there would still be an increase in the cost to the client if she charged VAT (or a reduction in her profit).

Uncertain

kingfisherblue wrote: »

I believe that as an employer she would need the above two insurances by law, as a minimum.

Most household insurance policies give this cover for domestic staff (but not for businesses run from home).

Uncertain

ohreally wrote: »

Theatrical, even.

Cinematic anyway :rotfl:

vintner55

Please make sure she insures her car for business use if she's using it to pick up your kids.