Taking care of someone else’s child requires great responsibility, commitment, dedication and hard work. Every parent wants their nanny to be honest, trustworthy and reliable, but every nanny also deserves to have an employer with the same qualities.
Many parents quite understandably want to avoid the demands of running a payroll, so many will still suggest that their nanny accept ‘cash in hand’ payments to make their life easier. This means then that the nanny will be responsible for declaring their own earnings. However, HMRC (Her Majesty’s Revenue and Customs) actually frown upon cash in hand payments for regular employment. HMRC clearly categorises this type of work as employment, not self-employment.
Every employer is required by law to deduct tax and NI from their nanny’s pay. If your employer or potential employer is not paying your taxes and NI then they are avoiding their required statutory obligations and this is illegal. HMRC will impose a fine on your employers and will also chase you up with a demand for your outstanding income tax and National Insurance contributions as a result. Failure to pay your NIC will mean you could lose out on your entitlement to state benefits such as sick pay and maternity leave.
Most employers in the UK now pay their employees by bank transfer. While they can still choose to pay you in cash, they should still be responsible for paying your income tax and National Insurance Contributions.
You should always receive a Payslip on your regular payday and this will show your pay, as well as your income tax and NIC deductions. It also should show a PAYE reference number of your employer and whether you are paid by cheque, cash or directly to your bank account. Payslip can be given on paper or in electronic format.