The standard tax code for tax year (20/21) from April 2020 is 1250L, this then means an employee can earn £12,500.00 per annum before they pay any tax. This figure is then spread over the relevant pay periods in the tax year (52 if weekly and 12 if monthly) this then gives the tax free allowance for each pay period.
This can only be used by one employer, and if nanny gets a second job Basic Rate tax must be deducted. Failure to deduct Basic Rate tax will cause an under payment of tax to nanny. Nanny will then either get a demand of unpaid taxes or her tax code will be reduced.
The rates for this tax year are:
|Weekly Gross Earnings||Percentage Tax Paid|
|Up to £240||0%|
|Between £240 and £961||20%|
|Between £961 and £3125||40%|
Nanny’s tax code may be increased if she is married and her husband does not use all of his tax free allowance (£12,500.00).