Nannies are the only form of unregistered childcare in Britain and parents employing them are ineligible for childcare tax credits unless a nanny is already a registered childminder.
Two companies offering an alternative to the pay-as-you- earn (PAYE) arrangement are chartered accountants Nyman Lynden and the Inkberry Company, a recruitment agency. Both involve nannies setting themselves up as limited companies, in order to exploit tax breaks.
Under both schemes the nanny would become a limited company, known as a Personal Service Company. As a result, in the current tax year the nanny, as the only employee of her or his own PSC, could earn 4,615 before paying any tax or national insurance and still be entitled to main state benefits. Also, as the director and sole shareholder of the PSC, the nanny could take up to an additional 10,000 tax-free from the company, giving a tax-free total of 14,615.
Nyman Linden said its Nanny Counts scheme had been en- dorsed by the Professional Association of Nursery Nurses and was an 'irresistible and highly tax-efficient way' for nannies to provide their services to parents, who would no longer have to pay employer's national insurance out of their own taxed income. Marketing director Mike Phillips said, 'Our scheme gives nannies esteem, control and a contract. It is a win-win situation for nannies and parents.'
But he acknowledged that the scheme was 'not right' for everybody, especially those nannies who earn less than 150 per week net. They would be better off with a PAYE system.
Inkberry director Renato Raho said, 'Basically we will set up a nanny's own company for her and she will be the sole director. The parents employ the company, that is, they employ the nanny. The result is that not only is the nanny empowered professionally, but also that people who could not have afforded to have home-based childcare from a nanny now can.'
But Caryl Sabine, deputy head of the Chiltern College, which offers nanny and nursery nurse training, warned nannies to beware of companies offering parent-led schemes. She said, 'Nannies will only be empowered if they go with a nanny-led service that has their interests at heart.'
For details contact Nyman Linden on 020 7535 1500 and Inkberry on 01276 469 635.
