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

Hiring a nanny in the UK means you are legally becoming an employer. This involves crucial steps like checking their right to work, agreeing on a gross salary, providing a contract, and registering with HMRC to manage PAYE (tax and National Insurance). You must also get employer's liability insurance and set up a workplace pension if they're eligible.

Hiring a nanny is a fantastic way to get flexible, dedicated childcare in your own home. But it's important to know that when you hire a nanny, you aren't just finding a childcare provider—you're becoming an employer.

This comes with a set of legal responsibilities. It might sound daunting, but it's all perfectly manageable when broken down. This guide will walk you through every step, from the first interview to the first payslip, ensuring you're a fair, compliant, and confident employer.

Step 1: Find and Interview Your Nanny

Before you get to the legal side, you need to find the right person for your family. You can do this by using a regulated nanny agency, a trusted online platform, or through a personal recommendation.

As you start your search, be clear about your needs:

• Will they be a live-in or live-out nanny?
• What hours do you need?
• What are the specific duties (e.g., cooking, school runs, activities)?

When you move to the interview stage, you'll be checking their experience, qualifications, and references. This is also the time to start thinking about the formal side of employment.

Learn more: Where to Find a Nanny in the UK

Step 2: Conduct Pre-Employment Checks

Once you've found a candidate you love, you must complete some essential checks before they start work.

• Right to Work: You are legally required to check that your nanny has the right to work in the UK. You must check, copy, and securely store their original documents (like a passport or visa) as shown on the GOV.UK checklist.
• DBS Check: While not legally mandatory for a parent employer (as you are not an agency), it is a non-negotiable for almost every family. An Enhanced DBS Check for nannies will show any criminal convictions or cautions. If your nanny wants to be registered with Ofsted, they must have this.

Step 3: Agree on Salary (Gross vs. Net)

This is the most common pitfall for new nanny employers. Nannies sometimes quote their "net" (take-home) pay, but you must agree on a "gross" salary.

A gross salary is the full amount before any tax or National Insurance is deducted, and it must meet the National Minimum & Living Wage rules.

Why is this so important? If you agree to a net wage, you are responsible for paying all the tax and NI on top. If your nanny's tax code changes, your costs could suddenly skyrocket. Understanding the difference between net vs. gross pay is crucial for this reason.

Agreeing on a gross salary means you have a fixed, predictable cost. If you want to see exactly how a gross salary breaks down into employer costs and nanny take-home pay, our Nanny Salary Calculator can do the maths for you.

Step 4: Provide a Contract of Employment

A written contract is a legal requirement. You must provide your nanny with a "written statement of employment" on or before their first day of work.

This contract protects both you and your nanny by setting clear expectations. It must include key details like:

• Your name and your nanny's name
• The start date
• Pay (gross salary) and pay frequency (e.g., monthly)
• Working hours
• Holiday entitlement
• Job location and description of duties
• Sick pay and notice periods

You can find basic templates on the Acas website, but a tailored contract is always better.

Step 5: Get Employer's Liability Insurance

This is a legal must-have. Before your nanny starts, you must take out Employer's Liability Insurance. It's required by law and will cover you for at least £5 million if your nanny becomes ill or is injured as a result of working for you.

You can be fined £2,500 for every day you are not properly insured. This is often available as an add-on to your existing home insurance policy, but you must check that it specifically covers domestic employees.

Read our guide: Insurance for Nanny Employers: What You Need

Step 6: Register as an Employer with HMRC

Now for the admin. Because you are paying your nanny a salary, you need to register as an employer with HMRC. You must do this before your nanny's first payday.

When you register, HMRC will provide you with:

1. An Employer PAYE Reference Number
2. An Accounts Office Reference

You'll need these to run your payroll and report your nanny's pay, tax, and National Insurance contributions to HMRC every payday. This process is known as running payroll or "operating PAYE" (Pay As You Earn).

Even if your nanny says they are self-employed, this is usually incorrect for a typical nanny role, which is why you must register as an employer.

Read why: Why Most Nannies Are Not Self-Employed in the UK

Step 7: Manage Payroll, Pensions, and Leave

This is your ongoing legal duty as an employer.

Payroll and Payslips

Every time you pay your nanny, you must:

1. Calculate the correct Income Tax and National Insurance deductions.
2. Pay these deductions (plus your Employer's National Insurance) to HMRC.
3. Provide your nanny with a legally compliant payslip.
4. Report the pay and deductions to HMRC in a "Full Payment Submission" (FPS) on or before payday.

Learn more: How Much Does a Nanny Cost?

Workplace Pension

If your nanny is aged between 22 and the State Pension age and earns over £10,000 per year (£192 per week), you are legally required to enrol them into a workplace pension scheme and contribute to it.

Learn more: Do You Need to Provide a Pension for Your Nanny?

Holiday and Sick Pay

Your nanny is entitled to all standard employment rights. This includes:

• Holiday Pay: A minimum of 5.6 weeks of paid holiday per year. We break down the rules in our Employer's Guide to Nanny Holiday Pay.
• Sick Pay: You must pay Statutory Sick Pay (SSP) if they are off sick and meet the criteria.
• Parental Leave: Rights to maternity, paternity, and shared parental leave.

This seems like a lot. Can I get help?

Yes, it is a lot to manage, and that's exactly why we created Quinn.

While you focus on building a great relationship with your nanny, our payroll service takes care of everything for you: From registrations and filings to payslips and payments. Fully digital, no paperwork, no stress.

We make being a compliant nanny employer simple, giving you complete peace of mind.