Nanny taxes and more: what are my responsibilities when hiring a nanny?

by | Jan 30, 2023

Are you considering hiring a nanny for your family? While it’s exciting to finally find the perfect fit for your childcare needs, there are a few obligations to keep in mind. HMRC considers nannies to be employees or workers, and, except in circumstances where they’re working for at least three families at the same time, or have relatively few and fluid hours, nannies are not typically self-employed. When you hire a nanny to work in your home, you’ll become their employer, which means you’ll have legal responsibilities that you’ll need to comply with. It may sound a little daunting, but don’t worry – we’re here to help you navigate this and make the process as smooth as possible.

What are my legal obligations when hiring a nanny?

Right to work check

As an employer, you’ll need to ensure that your employee has the right to work in the UK. This involves checking their documents or their right to work online via a special code. If you hire a nanny with Bubble, we’ll do this on your behalf.

Employment contract

Before your nanny starts work or on their first day, you’ll need to provide them with an employment contract which outlines the terms of employment. This will outline information such as their salary and pay cycle, their place of work, their normal hours of work, their annual leave entitlement and information about sickness absence and pay. If either you or your employee terminates the employment, you’ll be bound to a notice period which you can outline in the employment contract if this will be above the statutory requirements.

Registering with HMRC, keeping a payroll record and providing payslips

You’ll need to keep a record of any payments you have made and provide your employee with a payslip at the end of their pay cycle. This will need to show earnings and any deductions that you have made, such as tax and national insurance. You’ll also need to register with HMRC and submit information to them. If you choose to work with us, we’ll make sure this happens on your behalf via our payroll service.

Income Tax and National Insurance contributions

When you hire a nanny, you must ensure that tax contributions and national insurance are deducted from their wages. This happens through a system called PAYE and the amount they pay will depend on their tax code. Other deductions may need to be made from their wages – for example, if they have a student loan. You’ll also have to pay National Insurance contributions as an employer. The amount you’ll pay can vary depending on your employee’s personal circumstances – for example, if your nanny is married or is an army veteran. 

Annual leave

In the UK, employees are entitled to 5.6 weeks paid leave per year. This may or may not include bank holidays, but many employers choose to offer additional allowance below the minimum. If your nanny works part-time, they’ll be entitled to 5.6 weeks of their own work schedule – for example, if they work 3 days a week, they must get at least 16.8 days of annual leave. If you’re unsure, you can use this calculator to work out how much holiday your nanny will be entitled to.

Minimum wage

Employees have a statutory right to be paid at least the National Minimum Wage or the National Living Wage. This is talked about as an hourly rate and varies depending on age and employment status (for example, to qualify for the National Living Wage, your nanny must be at least 23 years of age). It’s important to remember that the minimum wage considers actual earnings as opposed to the agreed hourly rate – so if your employee ends up working more hours than their contract specifies, you must ensure that their average hourly rate does not fall below the minimum wage. We typically find that the market rate for nannies sits well above the minimum wage at £16-£25 gross per hour in London, and £11-£16 per hour out of London.

Maximum working hours

Working Time Regulations specify that employees cannot be made to work for more than 48 hours per week on average. This means that, unless your nanny chooses to opt-out of this agreement, you cannot make them work more than this amount. If your nanny is willing to work above this threshold, you’ll both need to sign out an opt-out agreement. Your nanny can revoke this with two weeks’ notice.


You’ll need to set up pension contributions for your nanny if they’re between the ages of 22 and the State Pension age, and if they earn above the tax-free allowance. The minimum contribution you can pay as an employer is 3% and they’ll typically pay in 5%. If your nanny chooses to, they can opt out of their pension, and you can also choose to contribute more to their pension should you so wish. This is something that we will assist you with if you hire a nanny with Bubble.

Liability insurance

As an employer, you’ll need to have specific liability insurance. This will help you to pay compensation if your employee is hurt or becomes unwell as a result of their job. You can find a broker easily via an online search.

Parental rights

If your nanny becomes pregnant while working with you, they’ll be entitled to certain maternity rights such as maternity leave and statutory maternity pay if they meet qualifying criteria. Fathers and partners can also take one or two weeks of paternity leave. You can read more about maternity pay and leave on the website.

Sick leave

If your nanny is unwell while working for you, they can take time off work as sick leave. You’ll be required to pay statutory sick pay to eligible employees if they meet certain criteria.

These are just some of the factors you’ll want to be aware of when you hire a nanny – and while it might seem like a lot – our team can help you navigate this process with ease. Our expert consultants will offer you specialist advice and guidance, while we’ll also take care of all the admin so you can have total peace of mind in your search. 

If you’re interested in learning more, get in touch with our team who can help you find the perfect nanny for your family.

Looking to start your nanny search today?

Enquire now and one of our team will be in touch

Related Articles

5 tips for finding your perfect nanny

5 tips for finding your perfect nanny

Finding a full-time nanny for your family can feel daunting. You need someone who is going to love your kids, maintain your routines and fit with your family household dynamic. Even if you go into a...