Hiring a nanny – how much does it really cost?

How much will it cost me to employ a nanny?

by Fi Star-Stone |

You've found the most wonderful nanny, she's practically perfect in every way and the ideal role model for your little poppet - but could choosing a nanny as your childcare leave you short of cash?

The bonuses are endless – the continuity of care that a nanny provides means your little one continues the familiar routine in their own home when you return to work. There’s no breakfast to sort, or car-seat chaos to get to childcare drop-offs before work, and you’ll even get to shower in peace as most nannies start at 7am. It’s definitely a stress-free way to return to work.

Add to that your little one’s every need catered for, activities sorted, meals cooked, their room and laundry all taken care of and the best bonus of all - a familiar, regular care-giver to give hugs on demand, it’s easy to see why parents choose a nanny as their childcare solution. But with all the benefits can come the shocking financial blow.

How much will it cost me to employ a nanny?

Childcare costs are at an all time high and hiring a nanny has never been the cheapest option when it comes to returning to work. For a qualified professional nanny you are likely to pay anywhere between £400-500* weekly (net) for a qualified, live-out nanny. With tax and NI contributions added, that pushes the cost even higher, and things are about to get even more costly. The government’s automatic pension enrolment rule will affect every employer from June 1 2015, and this is going to add a considerable amount to the childcare bill if you hire a nanny.

The government’s automatic pension enrolment rule will affect every employer from June 1 2015

The government’s random date lottery scheme, which phases in from June 1 2015 through to April 2017, means families with nannies who qualify for pensions, will have to start finding a possible £500+ a year extra to keep their nanny - rising higher in the years that follow.

The new scheme has been welcomed by professional nannies, including qualified nanny Tracy Jackson, who thinks it’s a positive step forward. “The majority of parents are happy to pay the wages of a professional nanny and are aware of all the responsibility that comes with employing someone,” Tracy said. “I’m a qualified, experienced nanny, and I think it’s a positive step forward for nannies. Many companies have pensions schemes and I think nannies should have the same benefits as any other worker.”

Will my nanny have to be enrolled?

The new rules apply to any employee aged 22 or over and under state pension age who is paid over £192 gross per week, which is £833 per month. However, even if your nanny doesn’t qualify to be automatically enrolled, they still have the right to ask to join a workplace pension.

What if I my nanny wants to ‘opt out’ of the new pension scheme?

Your nanny can opt out of the pension scheme once they’ve been enrolled. However, you can’t ask or persuade them to, and if they do qualify for automatic enrolment, then you are legally obliged to enrol them.

Are nannies worth the cost?

Like all things parenting, it’s really about doing what works best for you and your family. A nanny can bring so much joy to the family and make returning to work so much easier and less stressful, but with all of these benefits comes the added financial cost and the responsibility of becoming an employer.

Before you start looking for the perfect Mary Poppins, sit down and take time to work out all of the costs involved and ensure you can afford to keep a nanny employed. It’s not fair to your little one or your nanny if you find after several months you can’t afford to carry on employment. In the words of good old Nanny McPhee ‘It’s rather sad, really, but there it is’.

*London average Professional Nanny net wage 2014 - according to the Nanny Tax Yearly Survey.

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