Can a nanny be self-employed?

Being a nanny can be a financially and emotionally rewarding job. You get to look after children, and you can be paid very well for it. But you may be wondering if it’s possible to run your own childcare business as a nanny. 

This article will explain the following: 

• Why most nannies aren’t self-employed
• The process for some nannies if they want to be self-employed
• The pros and cons of being self-employed as a nanny

Mainly because of the nature of their job. Nannies tend to:

• Only work for one family at a time
• Work a set amount of hours within a month
• Receive sick pay, annual leave and other employment related benefits
• Have to do the work themselves
• Use the equipment of their employers, e.g. use family cars to drive children to school

Because of this, HMRC will likely class them as an employee. A nanny that works in this way will have to be paid as such, e.g. the family they work for can set up a limited company and pay the nanny as an employee of said company. They will have their income tax and national insurance contributions automatically deducted from their salary.

This is how the vast majority of nannies operate. 

Technically a nanny can’t be self-employed. If you wanted to do this in line with HMRC regulations then you would have to be able to:

• Choose your own working hours
• Find a replacement nanny to take your place if you’re unavailable
• Have more freedom as to how the job is done
• Work for different families at the same time
• Use your own equipment, e.g. use your own car to drive the kids to school 
• Agree to do your job for a fixed, pre-agreed price, regardless of how long it takes. Therefore, you can’t be paid overtime.

If you meet the above criteria HMRC will likely see you as self-employed. HMRC will expect you to file an annual Self Assessment as a result. 

Also, one thing to note, if you’re working for different families you will have to register with Ofsted as a childminder. 

Even when you hit all the above criteria, you still have to get written confirmation of your self-employed status from HMRC before starting work with any family. Failure to do this could mean that the family could be liable for any unpaid tax you owe. 

HMRC looks at each situation individually before deciding to grant this status. Therefore, it’s better not to assume that if you apply for it that you’ll automatically get it. 

It’s always best to speak to HMRC directly if you’re unsure about anything to do with this. Before you enter a self-employed contract with a family, you should get them to complete the HMRC employment status indicator. 

You can easily register as self-employed, but this doesn’t automatically allow you to operate as a self-employed nanny. 

Being self-employed can reduce your tax liability in almost any field, child care included. Being a self-employed childminder can make you more money in the long run if you’re good at managing your financial admin. 

Not having to rely on one source of income, e.g. only working for one family, can help with financial flexibility. This is particularly helpful when the economy hits a rough patch.

It’s also easier to plan your life around work, e.g. a nanny can set up their own childminding business and reduce the amount of work they do on a day-to-day basis. 

Or, you can do it yourself, only working hours that suit you. You have more control over how much you can grow or not grow your business. Also, if you end up working for a family that is unsuitable for you, it can be easier for you to leave and find a new family. 

Having more freedom is great but this can come at the cost of greater job security. Sometimes the only contracts available to childminders/nannies are short term, particularly in the beginning of their career when they have little experience. This can mean you’re left without work for long periods of time. 

Also, employment contracts can give nannies better protection against mistreatment at work compared with being self-employed. 

It can be daunting to file annual accounts and keep on top of business finances, especially in the early stages of setting up a business. If you’re not well suited to it and can’t afford an accountant, it can be off putting to take the plunge into self-employment. 

Making mistakes with your financial admin can cost you a lot of time and money, as well as being a stressful experience. Having to do financial admin can also take away time from doing the thing you enjoy, looking after children. 

Managing your business’s finances can be difficult. Countingup makes it easier.  

The all-in-one app helps thousands:

• Plan for Self Assessment by providing real-time tax estimates
• Get insights into business performance with a real-time profit/loss reports
• Get paid faster with instant invoicing  
• Automate their expense categorisation and record receipts
• Save on accountant costs with organised financial data in one place

Start saving time and money on your financial admin. Find out more here.