How to employ a nanny legally and arrange payroll in the UK

Katerina Galkina · EN · 07/10/2026

When you directly hire a nanny for regular work at home, you usually become an employer. An agency may only introduce candidates; its involvement does not necessarily mean it runs payroll or assumes employment responsibilities. Check the contract. GOV.UK: employing someone at home ↗.

Establish status and right to work

Assess the actual working arrangement rather than the contract label. You cannot simply ask an employee to become self-employed to avoid tax and employment rights. Check uncertain status with HMRC or an adviser.

Complete the prescribed right-to-work check before employment and retain evidence. A passport or National Insurance number alone does not replace the applicable check. Use the official GOV.UK service ↗.

Agree gross pay and terms

Discuss salary before deductions. A net-pay agreement can make your costs unpredictable when the employee's tax circumstances change. Written terms should cover hours, duties, workplace, holiday, sickness, overtime, expenses and notice.

Check the current age-related minimum wage and accommodation rules where relevant. The employer's budget also includes possible employer National Insurance, pension contributions, insurance and payroll fees; it is not simply take-home pay.

Arrange payroll before the first payment

Register as an employer where required and operate PAYE yourself or through a provider. GOV.UK specifically explains that cash payment does not remove payroll and tax duties. Household employment and tax ↗.

Give the provider the start date, hours, gross pay and required employee information. Obtain a timetable for wages, reporting, deductions and HMRC payments. Provide payslips and record holiday and schedule changes. Check workplace pension and statutory-payment responsibilities rather than assuming domestic employment is exempt.

Plan insurance and changes

Arrange required employers' liability insurance and check whether an existing household policy actually covers the employment arrangement. Agree mileage, business-use insurance and responsibilities separately for driving.

Ask payroll services about setup, regular calculations, year-end work, replacement staff and closing employment. Before holiday, maternity leave or termination, check the process with the adviser. Delegating calculations makes administration easier without removing your responsibilities as employer.