What are live-in nannies?
Live-in nannies (or residential nannies) are nannies who live in the home they are working in. This is common for foreign nannies and au pairs who provide childcare/domestic work in return for accommodation and various other perks on top of their salary.
All live-in nannies require a minimum standard of accommodation, which usually includes having their own bedroom, preferably with own bathroom or en-suite.
In some circumstances, they are treated as part of the family and not as purely an employee. This tends to be the case for live-in nannies who:
share some meals with the family
share leisure activities with the family
share the same living space and spend time together in the evenings
How does having a live-in nanny affect the payroll?
Nannies who receive the aforementioned benefits from their employment situation are exempt from national minimum wage regulation.
The national minimum wage will come into effect for nanny’s who are not treated as part of the family, but instead the employer will be able to use the offset allowance when the nanny is live-in by £8.20 a day, £57.40 for a whole week (April 2020 to March 2021).
The other scenario is that nanny is given accommodation separate to that of the family, this then becomes a benefit in kind and needs to be declared annually to HMRC.
If there is a benefit in kind, it will mean nanny’s tax code will be decreased and her net pay goes down and as an employer having to pay an additional national insurance on the benefit amount.