Nanny – employed or self-employed?

Employed v self-employed nannies: Understanding roles, rules, and remuneration 

For families and childcare professionals in the UK, the distinction between employed and self-employed nannies is crucial, and impacts on everything from tax, employment rights, and compliance with HMRC rules to salary structures and eligibility for statutory benefits. 

Employed nannies 

The overwhelming majority of nannies in traditional arrangements are employees. If a nanny works regular hours, is paid a set wage or salary (weekly/monthly), carries out duties set by the family, and works exclusively or primarily for one household, HMRC will regard them as employees. In this setup, the family becomes an employer and has legal responsibilities: they must run payroll, deduct and pay tax and National Insurance at source, and provide statutory benefits such as paid annual leave, sick pay, maternity pay, pensions, and redundancy rights. Failure to treat a nanny as an employee when required can result in backdated tax liabilities, penalties, and loss of statutory rights for the nanny. 

For salary expectations, recent Norland data suggests live-out nannies are typically contracted based on a 50-hour work week, while live-in (residential) nannies are based on 60 hours per week. Part-time arrangements should be calculated pro rata against these standard full-time hours. 

Self-employed nannies 

HMRC’s position is clear, and they state that nannies “do not normally meet the criteria for self-employment.”

The main reasons are: 

  • Working hours and duties are usually controlled by the family, not the nanny (hours, tasks, schedule). In effect, the family has control. 
  • Nannies often work exclusively for a single employer, caring for the children from one family, following their routine. 
  • Nannies generally receive a set salary either hourly, weekly, or monthly rather than per job, which is suggestive of being and employee. 
  • If nannies receive paid holidays, sick pay, and other statutory benefits, this further reinforces that the nanny is an employee. 

However, there are exceptions where self-employment may legitimately apply. The most notable example is for maternity practitioners or “maternity nannies,” who work on a series of temporary, short-term contracts – typically supporting families with new-borns for just a few weeks at a time. Other specialist nannies who may work on short-term contracts include SEND/ALN specialist nannies and holiday nannies. Similarly, a nanny who works for three or more different families simultaneously or sets their own schedule and terms of engagement may also be considered self-employed. In these cases, the nanny must register as self-employed with HMRC and, where applicable, the Information Commissioner’s Office (ICO) for data protection purposes. 

Before agreeing to or relying on a self-employed setup, families must request written confirmation from HMRC of the nanny’s self-employed status. This is essential as self-employment cannot be assumed based on previous jobs or an individual’s self-assessment status. Employment status is always determined by the specifics of each arrangement and does not transfer automatically from job to job. 

Roles, rights, and risks 

A key consideration is the lack of statutory rights for self-employed nannies with no entitlement to paid leave, pensions, statutory sick or maternity pay, or redundancy. On the other hand, employees enjoy full employment protections and benefits. 

Employed nannySelf-employed nanny
Typical arrangementRegular hours for one or two families, directed by employerWork a series of temporary positions, work for three or more families
Tax and NIEmployer deducts via PAYENanny registers/report to HMRC
Statutory benefitsEntitled (holiday, SSP, SMP, redundancy, pension)Not entitled
Legal compliancePayroll, employer registration requiredMust have written HMRC confirmation
Salary basisLive-out: 50 hrs/week; Live-in: 60 hrs/weekPer job/contract
InsuranceFamily will need employers’ liability insurance

Ofsted registered/CIW approved nannies must have public liability insurance
Self-employed nannies will need public liability insurance and may want to consider professional indemnity insurance
Summary table: Employed v self-employed nannies [

For families and nannies alike, the message is clear: employment status must be established for each role, with HMRC guidance closely followed to ensure compliance and avoid costly mistakes. Where a family employs a self-employed nanny and does not obtain written confirmation of the nanny’s self-employment status from HMRC, if it later comes to light that the nanny has not been granted self-employed status, the family can become liable for all backdated tax and National Insurance contributions. It is possible to use the Check Employment Status for Tax (CEST) tool to find out if the nanny should be classed as employed or self-employed for tax purposes. 

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