A Step-by-Step Guide to Employing a Nanny in the UK

1. Understand Your Legal Role as an Employer

If a nanny works regularly for you in your home, follows your instructions, and is not running their own business, they’re legally your employee.

That means:

• You must register as an employer with HMRC
• You must operate PAYE (Pay As You Earn)
• You must provide a contract, payslips, and meet statutory obligations

Even if your nanny says they are self-employed – that’s usually incorrect.‍

Read: Can a nanny be self-employed?

2. Create a Legally Compliant Employment Contract

You’re legally required to give your nanny a written statement of employment (contract) before or on their first working day.

The contract should include:

• Start date and working hours
• Job duties and responsibilities
• Holiday entitlement
• Sick pay policy
• Notice periods
• Pay rate (gross)

A clear contract avoids misunderstandings later.

3. Register with HMRC and Set Up Payroll

Before your nanny starts, you’ll need to:

• Register as an employer with HMRC (can be done online)
• Set up PAYE to handle tax, National Insurance, and pensions
• Get their NI number and check their right to work in the UK

Every payday, you’ll need to:

• Calculate deductions for tax and NI
• Pay employer contributions
• Provide a payslip
• Report everything to HMRC via Real Time Information (RTI)

You can also use our Nanny Cost & Salary Calculator to see your full monthly cost.

4. Handle Pension Contributions

If your nanny earns more than £192/week and is over 22, you must:

• Enrol them into a workplace pension scheme
• Contribute at least 3% of their qualifying earnings
• Let them opt out if they choose (but enrolment is mandatory)

This applies even if they only work part-time.

5. Provide Paid Holiday and Statutory Leave

Nannies are entitled to the same minimum holiday rights as any other worker:

• 5.6 weeks of paid holiday per year (pro rata for part-time)
• Statutory Sick Pay (SSP) after 3 consecutive sick days
• Maternity leave and pay (if eligible)

These must be built into your planning – and budget.

6. Get Employer’s Liability Insurance

You’re legally required to have employer’s liability insurance if you employ anyone – even in your home.

This protects you in case your nanny is injured while working for you. Many home insurance policies don’t cover this, so you may need a separate policy.

7. Run a DBS Check (Optional)

It’s not a legal requirement, but most families request an Enhanced DBS check before hiring a nanny. It helps ensure your nanny has no criminal history that would disqualify them from working with children.

Many nannies already have one – but check the date and ask to see the certificate.

8. Pay Your Nanny Correctly and On Time

You must pay your nanny:

• Gross salary (not cash-in-hand or net)
• Through a bank transfer with proof
• With a payslip showing tax, NI, and pension deductions

Avoid “net pay” agreements — they can lead to surprise costs for you.

9. Keep Records and Stay Compliant

HMRC requires you to keep records of:

• Contracts and pay details
• Tax payments and reports
• Holidays and sick days
• Pension contributions

You must store these securely for at least 3 years.

10. Or Let Us Handle All of It for You

Hiring a nanny legally can feel like a full-time job: Registering with HMRC, calculating tax, running payroll, creating a contract, paying pension contributions, managing holidays…

That’s exactly what we take care of – start to finish.

• Registering with HMRC
• Creating a legal employment contract
• Calculating and paying tax, NI and pension
• Sending payslips and making salary payments
• Tracking holidays, sick days or maternity leave
• Verifying an Enhanced DBS check
• Ensuring valid employer’s liability insurance is in place
• Staying compliant with changing employment laws

You focus on your family. We’ll handle the paperwork.

Learn more about nanny payroll service