Employing Mother as Nanny / Childminder

nimdy

My wife has mentioned wanting to go back to work so she can contribute to the household income. Our daughter is only four months old and my wife has just had her maternity pay come to an end and as she was on a fixed term contract no longer has a job to go back to.

My wife's mum is currently looking for work also. My wife has suggested the possibility of her getting a full time job and employing her mum to look after the baby during the day. Whilst the majority of her salary will go towards her mums salary, there will be a chunk left over to put into the household kitty.

I'm in two minds about the suggestion. Part of me thinks it's a great idea - my wife can get out to work again, and baby will be looked after by her nanny during the day. I have concerns about mixing family with business/employment though. What if we have disagreements etc. The other thing that worries me is that I'd be counted as an employer so would need to provide insurance, pay her income & NI tax and pay into a pension scheme. How much would this add to say a £15k a year job?

Does anyone here have experiences of this kind of arrangement, or any advice from those that have thought about it?

Thanks

DevilsAdvocate1

I have a few friends who did this. Their mum registered as a childminder. They went through the full process, doing a couple of courses and being inspected by Ofsted. Takes about 3 months.

As a registered childminder, the grandmother is self employed, so you have no worries about tax and NI. The grandmother has to fill in a tax return annually and has to register as self employed.

One other advantage is that if you qualify for working tax credits, you can claim these as the grandmother is a registered form of childcare.

nimdy

Thanks for the quick reply. I didn't realise child minders were treated differently. I'll have to research what qualifications she'd need in order to be above board.

Did your friends find the arrangement worked for them?

Unfortunately we don't qualify for tax credits (I don't earn a huge amount, but gov consider it too much to be worthy of support).

Poppie68

Is it still the case that the grandparent if they register as a childminder have to also look after other children? Would the grandparent be willing to do this?

duchy

Poppie68 wrote: »

Is it still the case that the grandparent if they register as a childminder have to also look after other children? Would the grandparent be willing to do this?

How would that work ?

As a self-employed person the childminder gets to choose whether they care for a single or multiple child -I don't understand how they could be made to look after another child too ?

EDIT A quick google search shows old articles saying there needs to be one other child cared for (or at least one showing on "the books even if infrequently) for any OFSTED inspection. Can't find anything current though- so maybe that proved to be unworkable/unenforceable ?


Whilst searching I came across an interesting piece about grandparents qualifying for NI contribution protection when caring for their grandchildren

Poppie68

duchy wrote: »

How would that work ?

As a self-employed person the childminder gets to choose whether they care for a single or multiple child -I don't understand how they could be made to look after another child too ?

EDIT A quick google search shows old articles saying there needs to be one other child cared for (or at least one showing on "the books even if infrequently) for any OFSTED inspection. Can't find anything current though- so maybe that proved to be unworkable/unenforceable ?

I know it used to be the case but didn't know if it still was...Was it for tax credit purposes?

CathA

Poppie68 wrote: »

Is it still the case that the grandparent if they register as a childminder have to also look after other children? Would the grandparent be willing to do this?

I think you'll find this is correct. When my daughter mooted this idea I looked into it (about a year/18 months ago? ) I think it's done so that if you're in this situation, i.e. using a relative to look after your child, there's no opportunity for fraud/fiddling of figures so that you can claim tax credits etc. Not for an instant saying that's what you'll do, it's not written in any of the government literature but I'll bet you a million pounds that's why the rules state that if a relative looks after your child for monetary gain they have to prove they are proper child minders and are looking after other kids as well.
I appreciate that if you were unrelated your child minder could look after any number of children, from one child to several, and it would make no difference but it's the fact you are related that is the issue. After all, if you could just employ your mum as a child minder and deduct any fees from your income that then makes you eligible for tax credits etc, everyone would do it. If you said you paid her £500 per week(but only paid her £250) for example, she would therefore need to charge the other child's parents a similar sum, and if she didn't then questions would be asked somewhere along the line.
In some departments the government is amazingly stupid (I was a civil servant for 12 years, trust me I know! ) but on this one they have shut that loophole. Hope that helps. X

Spendless

The rule about Grandparents having to look after at least one other child if they register as a childminder was to do with if you claim help with childcare costs either via the tax credit system or using childcare vouchers. It was brought in to stop Grandparents (or other relative) registering as a childminder purely to look after their Grandchild/ren and it being paid for by the Government. It was fetched in some years ago, but whilst I've been on this site as I recall threads about it.

In this case the OP hasn't said they will claim any childcare costs.

GobbledyGook

If your MIL registers as a childminder then she'll be self-employed. However, you'll have to be very careful about it because if she is a child minder only to your child, and only intends to be a child minder to your child, that might blur the self-employed/employed line.

The rule about a relative is purely for tax credits and childcare vouchers. It was to stop grandparents who'd cared for grandchildren for years suddenly charging.

Also bear in mind if your MIL goes down the childminder route she'd have to look after your child in her home and she'll have to follow all OFSTED guidelines - and they are not a piece of cake.

Perhaps look into Nannying. There are companies that specialise in sorting payroll for nannies so they could let you know exactly how much a 15k salary would actually cost you.

CathA

On a separate thought, make sure if your Mil does look after the baby, make sure you have a plan b if she is ill or can't look after her. Also, looking after a 4 month old every day is relatively easy, as they get older it's not quite so simple. I've had my grandson usually 2 days a week since he was about 3 months old and now he's 2 1/2. However, my daughter is doing her teacher training placement for 10 weeks full time so I have him every day. 5 weeks in and I'm very tired, early mornings don't agree with me and you have to have eyes in the back of your head. I'm not as quick or nimble as I once was, hence why reins are a definite part of my repertoire, whether they are "fashionable " or not! It's definitely not easy second time round, though is very rewarding and you get to give them back!

AnnieO1234

Remember in your research that if grandmother by either being directly employed or by only looking after your child is deemed as employed, then you would be liable for her pension, NI contributions etc. I know a few people this has affected who've previously employed nannies and au pairs. xxx