National Minimum & Living Wage Rules for Nannies

Your nanny is your employee and is legally entitled to be paid at least the National Minimum Wage (NMW), or the National Living Wage (NLW) if they are 21 or over. For the 2025/26 tax year, the National Living Wage is £12.21 per hour. For live-in nannies, you can deduct a small, fixed "accommodation offset" from their pay, but only if their total pay still meets the NMW/NLW rules.

When you hire a nanny, it’s easy to focus on the annual salary. However, as an employer, you have a legal duty to ensure that their pay, when averaged out, never falls below the hourly rate set by the government.

Because your nanny is your employee, they are fully protected by UK wage laws. Paying less than the minimum wage isn't just unfair—it's illegal and can lead to severe penalties from HMRC.

Here’s a clear guide to the rates and rules you must follow.

National Minimum Wage Rates (April 2025 - March 2026)

The rate your nanny is entitled to is based on their age. These rates are set by GOV.UK and typically change every April.

These are the minimum gross hourly rates you must pay:

Age 21 and over: National Living Wage (NLW) – £12.21

18 to 20: National Minimum Wage (NMW) – £10.00

Under 18: National Minimum Wage (NMW) – £7.55

Apprentice: Apprentice Rate – £7.55

For the vast majority of nannies, you will be paying the National Living Wage (NLW) of £12.21 per hour.

The Special Rule for Live-in Nannies: Accommodation Offset

This is the most common area of confusion for employers of live-in nannies.

You cannot pay your nanny less than the NMW by claiming their "pay" is the room you provide. They must still receive a wage.

However, the law allows you to deduct a specific, fixed amount from their pay to account for the accommodation. This is called the accommodation offset.

• The Rate (2025/26): The maximum you can deduct is £10.66 per day (or £74.62 per week) that the accommodation is provided.

This is the only benefit-in-kind that can legally count towards NMW pay. You cannot deduct the cost of food, utility bills, or Wi-Fi if it takes your nanny's pay below the minimum wage.

How the Calculation Works

You must ensure that after you’ve deducted the offset, your nanny’s pay still meets the NMW.

Example:

• Your live-in nanny is 25 and works 40 hours a week.
• Their minimum pay must be: 40 hours x £12.21 = £488.40 per week.
• You provide accommodation 7 days a week. You can deduct the offset: 7 x £10.66 = £74.62.
• This means their minimum gross pay must be at least: £488.40 - £74.62 = £413.78 per week.

This is why agreeing on a fair gross salary is so important, as this offset is a complex but crucial part of their payroll calculation.

The "Salaried Worker" Trap

This is a major risk for nanny employers. Let's say you agree on a gross salary of £32,000 per year for a 50-hour week.

• This breaks down to £12.30 per hour, which is just above the NLW (£12.21). You are compliant.

But what if your nanny regularly stays late?

• If they end up working an average of 52 hours per week, their real hourly rate drops to £11.83.
• This is illegal. You are now underpaying them and have broken NMW law.

As an employer, you are legally responsible for tracking your nanny's hours to ensure their average hourly pay never falls below the legal minimum for each pay period.

How to Stay Compliant

The rules around NMW, accommodation offsets, and tracking hours are complex. It’s not just about agreeing on a salary; it's about ensuring your payroll is legally compliant every single month.

This is exactly what Quinn was designed to solve.

Our payroll service takes care of everything for you: We ensure your nanny’s pay is always compliant with NMW/NLW rules. We correctly calculate the accommodation offset for live-in nannies and provide clear, legal payslips that show every calculation.

Fully digital, no paperwork, no stress.