Abolish tax on nannies or allow deduction on salaries paid to nannies
Parents are required to pay PAYE and NI on employing nannies.
British parents shoulder some of the highest childcare costs in the world.
The average gross salary of a full time live-in nanny in central London is £27,000, which includes £9,500 in tax and national insurance contributions.
Because a nanny’s gross wages are paid out of the parents’ after-tax income, this effective double taxation means one parent needs to earn £37,000 a year just to cover the cost of the nanny.
Action government should take:
1). If nannies are treated as employees than parents should be treated as employers and allowed a tax deduction.
2). If not the requirement to pay tax on nannies should be removed
I believe that this will be tax neutral as lower childcare costs will enable more mothers/ fathers to work.
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