Can a Nanny be Self-Employed?

We are often asked if nannies can be self-employed and therefore sort out their own Tax and National Insurance. Under HMRC rule nannies cannot generally be classed as self-employed for the reasons set out below.

A worker is considered ‘employed’ if they:

  1. have to do the work themselves
  2. can be told at any time what to do, where to carry out the work or when and how to do it
  3. can be moved from task to task
  4. are paid by the hour, week or month
  5. can be paid overtime or receive bonus payments

A worker is considered ‘self-employed’ if they:

  1. can hire someone else to do their work or engage helpers at their own expense
  2. risk their own money
  3. provide the main items of equipment needed to do their job, not just the small tools that many employees provide for themselves
  4. agree to do a job for a fixed price regardless of how long the job may take
  5. can decide what work to do, how and when to do the work and where to provide the services
  6. regularly work for a number of people
  7. have to correct unsatisfactory work in their own time and at their own expense

***Please note that these lists are not exhaustive.***

Exceptions: When might a nanny be self-employed?

As nannies generally fall into the first list, they cannot be considered self-employed. However in some cases HMRC do grant nannies self-employed status, for example, if the nanny works in a series of temporary positions, or works for three or more families at the same time (in which case she would have to register with Ofsted as a child minder). The nanny should contact HMRC directly for approval if she requires this. HRMC will assess each situation individually.

It is worth also noting that HMRC would generally allow anybody to register as self employed and so being registered does not instantly mean that you can do all of your jobs under a self employed status.

Who Is Responsible?

Each new family should complete the HMRC Employment Status Indicator to decide whether the nanny should be their employee or can be self employed for the job. The onus for this is always on the employer and it is the employer who can be fined heavily by HMRC for not doing this correctly.

LINKS:

HMRC Employment Status Indicator           http://www.hmrc.gov.uk/calcs/esi.htm