Gross vs Net Pay: A guide to Nanny Salaries
Posted on 16th February 2021
Historically, Nannies talk in their Net (take home) pay. Here's a look at why this attitude needs to change and the benefits of discussing a Gross salary.
A lot of nannies are used to working in their take home pay and have no idea what their actual Gross salary is. The Go Gross campaign started in 2017, encouraging payroll companies, nanny agencies, nannies and nanny employers to make the move over to Gross - and for many good reasons!
HMRC will not recognise a Net salary. This means any discussions with HMRC will require you to know the Gross figures.
This is the same with banks and mortgage applications - you will not be able to apply for a mortgage without knowing your Gross income.
There is no direct translation between X Gross = X Net (when looking at hourly rates). This means you cannot compare two different jobs like for like when job hunting - eg if two roles are advertised at £10 net per hour, one for 30 hours PW and one for 50 hours PW, the 30 hour role is actually offering a lower Gross hourly rate than the 50 hour role as there would be less tax on top.
This also makes it clearer if you are looking for roles outside of nannying - no other job market will talk in Net, typically other industries advertise Gross Annual salaries. This means you can shop around when looking for work and ensure you consider only roles that cover your outgoings.
The tax free allowance has increased yearly for the last few years (its increased by £1500 in the last 3 years alone). If you have a Gross salary agreed, the nanny will see the pay rise when the tax free allowance goes up. If you have a Net salary in place, your nanny's salary will stay the same and the employer will see the saving their end.
Clarity and job security - with a Gross salary, an employer will know the fixed salary they are committing to and be able to ensure its affordable for them long term. If you agree a Net salary, the employer is committing to pay ANY and ALL tax the nanny owes - eg if they have a second job, an outstanding tax bill from an old job or a student loan, the employer will be liable to pay it all. The employer will also be liable for employer AND employee pension contributions. This could result in the employer needing to let the nanny go as the costs are more than expected.
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