To answer many of the common questions people have about auto-enrolment and workplace pensions, we have put together this handy list of FAQs. We also have a page of tax and payroll FAQs to answer common questions about more general aspects of employing a nanny.

Taxing Nannies jigsaw

The duties start date is the date that the Pensions Regulator determine that your workplace pension duties come into effect. It is the start date for any new employee.

Taxing Nannies are not financial advisors and therefore if you wish to investigate either the charges that different schemes apply or the performance of the funds of different pensions schemes, then it is your prerogative to do so. If you appoint us to act for you we will set up a pension scheme on your behalf, and we will use NEST, the Government backed Pension Scheme. Your employee(s) will automatically be enrolled into that scheme unless you notify us immediately that you wish to use an alternative provider.

An employee under 22 or between state pension age and 74 can choose to be auto enrolled if they so wish but the employer does not automatically have to auto enrol them. However, if the employee chooses to be enrolled, the employer must make the statutory contributions (see below).

All employees between the ages of 22 and pensionable age earning over £10,000 gross per annum need to be automatically auto enrolled. If the earnings are under £10,000 the employee can ask to be auto enrolled and then you will be required to set up a pension scheme for them.

All employees that qualify by age and salary must be auto enrolled. If they do not wish to participate in the pension scheme you will still have to auto enrol them into a pension scheme and all the compliance issues will still have to be dealt with. The employees will have 6 weeks to opt out after the auto-enrolment process has been completed. An employer cannot coerce or influence an employee’s decision.

The current contributions are a total of 8% overall, with a minimum employer contribution of 3%, and employee contribution of 5%, on gross monthly earnings of between £520 and £4,189.

As long as the total minimum contributions are paid, and you pay at least the employer minimum percentage, you can top up or pay the employee(s) contribution on their behalf.

The employee can cease making contributions at any time, and for any reason. If they wish to cease contributions, then they will need to email us directly. If your employee ceases contributions, then you as the employer are no longer required to make contributions.

The employee’s pension contribution is deducted from the net pay, and the employer pays them the salary minus the employee’s pension contribution as per the net pay amount on the payslip. In turn, both of the employers contribution and the employees contribution are collected from the bank account that you will provide to NEST, via Direct Debit, in the month following the month in which the payments are deducted from salary. We normally set up the scheme so that contributions are taken on the 22nd of each month.

Contributions will automatically cease, and the pension scheme will become inactive. The final pension contributions will not be collected until the 22nd of the month following the final salary payment, so the Direct Debit with NEST should not be cancelled until the final payment has been taken.

Every employer is allowed to postpone paying contributions for 3 months for each employee (including new employees). However, the employer must still have arranged to auto enrol its employees from the duties start date, even though pension contributions will not be paid for 3 months.

Taxing Nannies will comply with all the payroll requirements regarding auto-enrolment which include calculating the contributions, and detailing them on the payslips. We deal with the enrolment of employers into NEST, including dealing with the various compliance issues such as issuing letters to employees, and completing the Declarations of Compliance with the Pensions Regulator, and uploading data to the pension provider each payday.

There is a set up fee of £65 + £15 per employee inclusive of VAT for enrolling a client into NEST. This will followed by an annual renewal fee of £60 + £15 per employee, payable on the anniversary of your duty start date. We also reserve the right to charge an additional monthly fee for any employer using another pension provider, due to the additional work that will be required by us.

  • If your employees do not qualify for automatic auto enrolment, then we will provide you with the letter you need to give them, giving them the opportunity to auto enrol.
  • You must agree to NEST’s terms and conditions and also provide your bank account details for the pension payments to be deducted from.
  • If you decide to go with an alternative pension provider you will need to notify us immediately and start the procedure for auto enrolment yourself.
  • 3 months after the duties start date (ie at the postponement date) you will need to start paying pension contributions and deducting employee contributions from the salary. You will be advised of the deductions to make.

  • If Taxing Nannies are dealing with the enrolment process, you can ignore email correspondence from the Pensions Regulator and NEST as we will receive copies of all emails, and will deal with as appropriate.
  • If you wish to make your own arrangements then you need to take note of the contents of any correspondence you receive and find a pension provider immediately.
  • You must nominate your contacts with the Pensions Regulator, regardless of who is setting up the pension scheme, and which pension provider is used.

This is the last step in the auto-enrolment process, which is required by the Pensions Regulator. It has to be completed within 5 months of the duties start date, but it can only be completed once the first pension contribution has been made. Therefore, where an employee’s pension contributions are postponed for 3 months, it can only be completed after the postponement date.

If you are using Taxing Nannies to deal with the set up process with NEST, the declaration will be completed for you, and you can ignore all the communications from the Pensions Regulator.

If, however, you are auto enrolling yourself, then you will need to complete the declaration at the appropriate time.

There are various penalties for non-compliance and these range from fixed penalties of £400 to £50 per day up to a maximum of £5,000 for an individual or £50,000 for an entity. If you continually avoid dealing with your auto enrolment requirements, you could face a prison sentence of up to 2 years.

Please note that the above information is correct as at March 2022

View more details of the auto-enrolment support we provide, or, to discuss auto-enrolment or any aspect of our nanny tax and payroll service, please get in touch…