2020-21 Tax, NI, Student Loan & Redundancy

All employees, including temporary and part time, must make Tax and national insurance contributions. 

Employers, including domestic employers, legally have to make Tax and national insurance deductions from a nanny's wage and pay this to the government on the nanny's behalf.

Tax

Annual Gross    (Based on standard tax code)

Up to £12,501                 0%

£12,501-£50,000          20%

£50,001-£150,000        40%

Over £150,000             45%

National Insurance

Monthly Gross              NI Paid

Up to £520.00                 0%      

> £792.00                        Employees start paying NI    

>£732.00                            Employers start paying NI

£792.00-£4,167.00          12% paid by the employee

£732.00-£4,167.00          13.8% paid by the employer

Above £4,167.00             2% paid by the employee/ 13.8% paid by the employer

Student Loans

With effect from April 2020, the thresholds for making Student Loan deductions under the 2 schemes are as follows.


The nanny will pay 9% student loan on everything they earn over:

  • Plan 1 - £18,935 annually (£1,577.92 a month or £364.14 a week)

  • Plan 2 - £25,725 annually (£2,143.75 a month or £494.72 a week)

Postgraduate Loans

Plan 1

The thresholds are £372 a week or £1,615 a month (before tax and other deductions).

Plan 2

The thresholds are £511 a week or £2,214 a month (before tax and other deductions). They change on 6 April every year.

Postgraduate Loan

The thresholds are £404 a week or £1,750 a month (before tax and other deductions).

Redundancy

All employees are entitled to redundancy pay after 2 years of complete service.

  • 1.5 weeks’ pay for each full year of employment after their 41st birthday

  • a week’s pay for each full year of employment after their 22nd birthday

  • half a week’s pay for each full year of employment up to their 22nd birthday

 

Weekly pay is capped at £538. The maximum amount of statutory redundancy pay is £16,140.

We advise contacting us directly to accurately calculate redundancy pay.

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