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Mother and father who make use of nannies may see their annual childcare payments soar by greater than £1,000 from April underneath measures introduced on this week’s Finances.
The chancellor’s key tax-raising coverage will see employers’ national insurance contributions enhance from 13.5 per cent to fifteen per cent subsequent 12 months, with the wage threshold at which employers pay contributions dropping from £9,100 to simply £5,000.
Whereas this transfer was aimed toward companies, dad and mom who make use of nannies for his or her childcare preparations may also be impacted.
Jenni Bond, managing director of Nannytax, a payroll service for folks, mentioned the additional NI fees would add greater than £1,000 to the annual value of hiring a nanny, based mostly on the typical wage of £46,228 for nannies in London.
The extra prices could possibly be larger nonetheless, mentioned Bond, if the variety of hours the nanny was working positioned their hourly earnings under the extent of April’s new national minimum wage.
Though the chancellor prolonged safety to small companies by boosting the employment allowance to allow them to offset larger payroll prices, employers of home workers together with nannies, cleaners and gardeners are exempt from utilizing it. The foundations exclude staff who’re being employed in a private capability to help the operating of a family.
“The price of childcare is astronomical, and home employers ought to completely be included [in the employment allowance],” mentioned Bond.
Joeli Brearley, founding father of the charity Pregnant Then Screwed which campaigns for extra inexpensive childcare, mentioned the NI enhance would “hit working dad and mom onerous, significantly moms, who nonetheless bear the brunt of childcare prices”.
“For a lot of, using a nanny isn’t a luxurious however a necessity to maintain their careers going. With this added expense, we danger pushing extra dad and mom — particularly single dad and mom and moms — out of the workforce.”
Bond mentioned that will increase within the minimal wage, introduced on Tuesday, would additionally pile “on high of these will increase dad and mom would have anticipated”. The nationwide dwelling wage for over-21s will rise from £11.44 to £12.21 in April 2025.
199The variety of youngsters’s nurseries pressured to shut within the 12 months to September 2024, in keeping with the Nationwide Day Nurseries Affiliation
The NI hit to folks with nannies comes as dad and mom grapple with the prices of childcare after a surge in nursery closures and a push for staff to return to the workplace after the pandemic.
The yearly wage for nannies exterior London rose by 12 per cent year-on-year to £40,326 in 2023-24, in keeping with Nannytax’s annual wage index report.
In London, annual salaries for nannies rose by 8 per cent to £46,228.
Within the 12 months to September 2024, 199 nurseries had been pressured to shut, in keeping with the Nationwide Day Nurseries Affiliation, a charity representing nurseries throughout the UK.
“Plenty of this comes right down to power underfunding, significantly for 3 and four-year-olds,” mentioned Purnima Tanuku, chief government of NDNA, in September.
The Treasury declined to remark.
