How much does a nanny cost?

Where To Start?

If you're thinking about employing a nanny for the first time it can be difficult to know where to start. Don't worry, whatever stage of the journey you're at we can help you with everything you need to know about hiring - and paying for - a qualified nanny for your family.

What you can expect

Employing a nanny is an important task and there are plenty of things to consider once you decide to move forward, here we cover the financial aspects associated with taking on an employee - specifically in London, that you'll want to make sure you understand before you proceed.

How much do nannies cost?

Not sure how much a nanny is going to cost? We're often asked how much does a full-time nanny cost or how much do I pay a nanny, but no matter whether you're employing a nanny to work full-time or part-time, Live-in or Live-out, there are some universalities that you'll always need to take account of.

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'll 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 (attraction, marketing, selection & assessment 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'll be able to give to help you find a suitable nanny for your role.

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

So, 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 being the number of hours you require, the nanny's years of experience, and whether you employ 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 in terms of salary than a daily nanny, and the salary for a junior nanny, experience-wise, will be less than a nanny with years of career experience.

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.

So that in general, temporary nannies and 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.

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 cover nanny sharing on our Childcare Options page here.

Additional responsibilities

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

Employer Responsibilities

As a parent, when you appoint a nanny you become an employer (micro employer), and take on an employer's payroll responsibility and will have to pay Tax and National Insurance, and start paying into a pension on behalf of your nanny.

In addition, you will need to use a Real Time Information (RTI) compliant Pay As You Earn (PAYE) payroll system to make sure you’re fulfilling your legal obligations and making payroll filings with HM Revenue & Customs (HMRC).

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 nannyare 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.

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 is 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 nanny payroll services.

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

Specialist nanny employment payroll