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Tax Year 2025/26: What Families Employing Nannies Need to Know

  • Writer: Pro Nannies
    Pro Nannies
  • Apr 1
  • 3 min read

Updated: Apr 2


As the 2024/25 tax year draws to a close, changes to tax rates, National Insurance contributions, and statutory payments will impact families employing nannies. To help you navigate these updates, we’ve outlined the key changes that may affect your household employment costs from 6th April 2025 onwards.



Pink paper with "PLAN TAX" stamped. A wooden pencil, a calendar open to April, a smartphone calculator, and a white percent sign symbol.


1. Employer’s National Insurance Contributions Are Increasing

From 6th April 2025, Employer’s National Insurance Contributions will rise from 13.8% to 15%. This means the overall cost of employing a nanny will increase.


Additionally, the Secondary Threshold (the point at which employers begin paying National Insurance) will be lowered from £9,100 to £5,000 per year. This reduction will remain in place until at least 6th April 2028.


These changes mean that more of a nanny’s salary will be subject to National Insurance, increasing the employer’s overall tax burden. Families should plan ahead to accommodate these additional costs.



2. National Minimum Wage Increases

The National Minimum Wage (NMW) and National Living Wage (NLW) will rise from £11.44 to £12.21 per hour. This increase equates to an annual pay rise of approximately £1,400 for a full-time worker on the National Living Wage and will benefit over 3 million workers across the UK.


The National Living Wage applies to employees aged 21 and above.


What happens if an employer doesn’t pay the National Minimum Wage?

If HMRC finds that an employer is not paying their nanny the legal minimum, they may:

  • Issue a notice to pay back the owed wages (up to six years of back pay).

  • Impose a fine of up to £20,000 per employee underpaid.

  • Take legal action, including criminal proceedings.

  • Publicly name and shame the employer via the Department for Business and Trade (DBT).


It’s essential that families ensure they meet these legal requirements to avoid financial penalties.



3. Personal Income Tax Allowance Remains Frozen

The personal income tax allowance for 2025/26 will remain at £12,570. Employees will continue to pay income tax only on earnings above this threshold, depending on their individual tax code.



4. Changes to Statutory Payments

The following statutory rates will be updated from April 2025:

  • Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP): The first six weeks remain unchanged, but the weekly rate for the remaining 33 weeks will rise to £187.18 or 90% of the employee’s average weekly earnings, whichever is lower.

  • Statutory Paternity Pay (SPP), Shared Parental Pay (SPP), and Parental Bereavement Pay (SPBP) will all increase to £187.18 per week.

  • Statutory Sick Pay (SSP) will increase from £116.75 to £118.75 per week.



5. Accommodation Offset Allowance Increases

For live-in nannies, the Accommodation Offset Allowance is increasing. From 6th April 2025, employers can offset:

  • £10.66 per day (up from £9.99).

  • £74.62 per week (up from £69.93).


This allowance helps employers account for the cost of providing accommodation as part of a nanny’s overall compensation package.



6. Benefits in Kind & Taxable Benefits

If a nanny receives any taxable benefits as part of their employment, employers must declare these to HMRC. Employers should keep this in mind when structuring employment agreements.


Examples of taxable benefits include the payment of Ofsted registration fees and the use of a family car for work and personal use.



What Tax Year 2025/26 Means for Families Employing Nannies

These tax and wage changes may increase the overall cost of employing a nanny from April 2025. To ensure compliance and financial preparedness, we recommend that families:

  • Review current payroll arrangements to factor in National Insurance and wage increases.

  • Confirm that your nanny’s hourly rate meets or exceeds the new National Minimum Wage. 

  • Be aware of statutory pay obligations if your nanny takes maternity, paternity, sick, or parental leave.

  • Declare any taxable benefits (such as accommodation or car use) to HMRC.



Need Help? Pro Nannies Is Here for You!

We understand that employment laws and tax changes can be confusing. Whether you need help navigating payroll, understanding legal obligations, or planning ahead for wage increases, Pro Nannies is here to support you.


Get in touch today to learn more about how we can help you stay compliant and prepared for the 2025/26 tax year. You can Email Us or if you prefer Send Us a Message


 
 
 

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