Most people like to give their nanny a token of appreciation over the festive season. This can range from a bottle of wine or basket of toiletries to a week’s wage as a bonus. When deciding what to give your nanny there are two important things to consider –the budget for this gift and future gifts, and tax.
Any kind of cash bonus is taxable. It needs to be declared to HMRC and appear on the payslip, along with the tax and NI deductions. This is worth bearing in mind if the intention is to give a nanny an amount other than their weekly wage, as adding £100 will not translate to giving them an extra £100 spending money. Even if the bonus is in the form of cash or a cheque inside their Christmas card tax and NI still need to be paid on the value of it. Vouchers are also treated as cash.
Some employers find cash impersonal, although it is a safe option, and prefer to give a gift. Some gifts are taxable, particularly if they can be resold, but others are exempt as they are considered a trivial benefit. Seek advice from a payroll agency or by calling the HMRC employer helpline, then request confirmation in writing from your local employment office.
Above all remember that gift-giving should be a pleasure, not a chore (remember this when buying for Aunt Mabel too), and it is far worse to not give anything than get it wrong, particularly if you keep the receipt!