How Much Does A Nanny Cost?

Nanny agency or not

It's entirely possible to source an individual to work for your family just on your own steam, if you have time, either by directly trawling through an online social media platform or registering with an online service who use an algorithm to present you with a filtered list of candidates who're looking for your type of vacancy.

In doing so, there's a potential to save on the cost of paying an agency fee, but there can be drawbacks. So, our advice would be to let an agency do the hard work for you (sourcing & marketing, screening & assessment, coordinate and schedule interviews, negotiations and more). However, if you do go down the DIY route the smartest approach would be to tap into the expertise of your local nanny agency for advice and market insight, which is free with most (good) nanny agencies, and use the information they give to help you find a suitable nanny for your role.

Consider the costs of other childcare options

Though the cost of a nanny might be more than you expected, it can still be a more affordable option than others. You might be considering a daycare service for your children while you're at work. Remember, though, that those daycare services can be just that - daytime hours only, and if you're delayed they may charge you a late fee to boot. Whereas you can rely on a nanny to give your children their undivided attention. Live-in nannies are a good choice if your budget is a little tight, they not only help save costs for your family, but also provide flexible cover that you know you can rely on.

Nanny Salary

During our interactions with families we work with we're often asked about salaries or the nanny fees. How much should I offer to pay my nanny? What are the current rates of pay for a nanny in London?

The answer is that it depends on a few factors, but first of all, understand that you should always finalise salary agreements using a gross figure, that way you won't end up paying for, say, student loan repayments or any other debt repayments collected from your nanny's gross pay. You can jump to more information on gross vs net here

Nanny pay

The typical average hourly rates for an experienced nanny in London range from £11 to £15 net per hour.

The salary you pay your nanny can differ quite a bit, based on the requirements of the role. The most consequential things are the number of hours you require, the nanny's years of experience, and whether you're employing a live-in nanny or a nanny that lives out (also called a daily nanny).

All things being equal a nanny that lives in with your family will cost less than one that lives out in terms of salary, and the salary for a junior nanny - experience-wise, will be less than a nanny with years of career experience.

Your specified job requirements

The flexibility and range of additional responsibilities included in the job description can also impact on the nanny's fees.

Nanny Sharing

A nanny share is when two families partner together to each hire the same nanny to care for their little ones. Arrangements vary between families and there are pros and cons, but the costs involved in employing a full-time nanny can be drastically reduced. We explore nanny sharing in more detail on our Childcare Options page.

Temporary & part-time roles

When determining what pay to offer your nanny, the total number of hours can sometimes come into play as nannies are more likely to want to negotiate higher hourly rates for lower total hours, and because the supply for experienced part-time nannies who're looking to top-up their hours is less.

In general, temporary nannies or part-time nannies are typically offered higher hourly rates compared to full-time nannies in an effort to attract applicants, as the nature of these assignments, in terms of job security, needs to be compensated.

The great thing about hiring a nanny is that you can find a childcare solution that suits your family's exact needs. For instance, you can decide between the option of hiring a nanny to work either full-time or part-time in caring for your children. Doing so, of course, will go a long way in determining the overall cost of your nanny.

Full-time roles

Full-time nanny positions are usually 40 hours a week but the exact hours depend on the family. The costs associated with a full-time nanny go beyond that of basic pay. When you employ a full-time nanny you're hiring a legitimate employee, in essence. You need to be prepared to pay a contribution to their pension fund. Just because a nanny may only work for you for a few years doesn't mean they don't deserve access to a quality retirement in the future. As an employer, it will be your responsibility to help to contribute to that.

Nanny's Pension

Automatic enrolment requires employers (parents) to set up a pension for their nanny to save for later life.

While automatic enrolment into workplace pensions has been rolling out across the UK since 2012, many parents are still unaware about the introduction.

Nannies are employed workers so of course they should be entitled to the benefits that all other employees receive. However, families who employ a permanent or temporary nanny are micro employers, and not huge employers or even small businesses. Therefore, this introduction might be unwelcome by some, but it need not be as much of an issue as it may seem at first glance.

Much can be done to help parents manage these requirements.

For instance, the percentage contribution doesn't have to be paid on the whole salary. It can be paid on something called 'Qualifying Earnings' (sometimes called 'Banded Earnings') which will be less expensive for the employer.

Once again we see another reason to agree a Gross salary with your nanny as opposed to a net salary according to Nannytax. However, if you have agreed a Net salary with your nanny you will be responsible for paying in both the employer contribution and the nanny contribution. That means you would eventually be paying an extra 7% of your nannies salary!

For some nanny employers an extra £350 to £500 per annum may not be a show-stopper, but for others who have perhaps only managed to afford the costs of taking on a nanny through a combination of nanny sharing and Ofsted vouchers, this may be more of a concern.

Nonetheless, if you're happy with the flexible personal service through having a nanny and it's worked well for you, then this need not be a reason to give up. We suggest talking to a reputable payroll company, such as NannyTax or Way2paye, and find out what you can do to comply and lessen any impact of the costs of employing a nanny.

A good nanny is an investment and soon nanny pensions will be as familiar as, say, statutory holiday entitlement. The alternative - not paying into the nanny's' pension fund, carries penalties that will cost more than the cost of the pension contribution percentage, and devalues your nanny.

How to pay your nanny

If you're exploring your options and seeking individual advice from someone with an understanding of the ins-and-outs of payroll, we strongly recommend you speak with a tax and accounting specialist.

Gross to net

Unlike most other industries, nannies tend to talk in terms of net salary - and that's fine. However, when you draw up a contract for your nanny it's important to convert the agreed net total to an equivalent gross amount. There are many good reasons for converting net to gross, and a good nanny agency will cover all those points with you and simplify the calculation for you and provide up-to-date advice about other relevant nanny employment issues such as Ofsted registration and nanny sharing.

Do-It-Yourself Payroll

It's possible to do this yourself, but many families choose to use a payroll service to pay their nanny. But if you would like expert help and advice on payroll issues & nanny costs in London, Fulham Nannies recommend the following companies who specialise in providing families with payroll services for their nanny.

If the thought of maintaining payroll on behalf of your nanny makes your head spin, use a payroll service to perform all these obligations and more, it'll save you a lot of time.

Specialist nanny employment payroll services

Nannytax

Way2paye