How much does it cost to hire a nanny?

A nanny can be a very cost effective and convenient solution when you are looking at childcare costs, especially if you have two or more children.  There are several things to take into consideration when it comes to working out your budget, in addition to the gross salary you will be agreeing with your new employee.  The first important factor is to agree a gross pay rate, NOT net and this way you can ensure that your monthly or weekly outgoings can be fixed.   If your prospective employee is asking for a net amount, NannyMatters can advise you how to convert that into a gross figure. 

How much does it cost to employ a nanny?

In addition to the gross salary, depending on how much your nanny is earning, there could be employer’s national insurance and employer’s pension contributions.  You can ask the NannyMatters payroll team for a salary illustration which breaks all these costs down for you clearly.  Use our calculator to give you a quick ball-park-figure on the combined employer costs if you already know the hours and rate you will be paying. 

If you are not sure what the ‘going rate’ is for your nanny, contact a local nanny agency who may be able to help. 

If you are hiring a nanny through an agency, there will be an introductory fee to budget for and this will obviously vary between agencies and regions.  


Your existing household insurance policy may already cover domestic employees so do check with your insurer before taking out any additional liability cover. 


As an employer, if your nanny becomes sick, Statutory Sick Pay may become payable, this is not covered by HMRC.  If your nanny’s illness is long term then you could be liable to pay SSP for up to 28 weeks.  There are some insurance policies available to cover this eventuality.  

Maternity Pay 

If your nanny gets pregnant then her Statutory Maternity Pay will be covered by HMRC but she will still accrue holiday and if she qualifies for pension then you will continue to pay employer’s pension contributions. 

Payroll Services 

NannyMatters charge £260 per year for monthly payroll services and an extra £60 a year if you want us to manage the pension for you.  This annual fee includes one-to one advice and expertise on all aspects of your payroll, access to our contract templates, registration of your PAYE scheme with HMRC, calculations of SSP or SMP and submission of all RTI to HMRC as required. 


Your nanny may incur expenses during the working day like mileage or refreshments which you will need to reimburse.  This can be easily handled.  


Once your nanny has completed two continuous years of service, they may become eligible for redundancy pay and this is calculated using various factors including salary and age.  Nannies often only stay with a family until the children start school and even if, at the beginning of the employment, they are made aware of the end date, if the employer is ending the employment it qualifies as redundancy.  


One way to reduce your nanny costs is to consider a nanny share with another family and we have a blog dedicated to how it works here. 

The Tax Free Childcare Scheme 

You may be able to save some money by using the government’s Tax-Free Childcare Scheme.  More details on how you qualify can be found on our blog here.