Many nanny jobs are advertised and agreed as a net weekly or monthly figure, because that is what the nanny will see in their bank account. It feels simpler, but it puts the risk of every tax change on the family. This post explains the difference, works through a 2026/27 example, and shows how to turn a net figure into the gross one to write in the contract.
If you employ a nanny directly, GOV.UK says you are usually the employer: you register with HMRC, run payroll, deduct their income tax and National Insurance, and give them payslips.
Gross vs net: what each means
- Gross pay is the full salary before any deductions. It is the figure your payroll starts from, and the one employer National Insurance and pension are worked out on.
- Net pay is what is left after income tax, employee National Insurance, pension contributions and any student loan repayment. It is what the nanny receives.
The payslip shows both. The difference between them belongs to HMRC and the pension scheme, not to the nanny or to you, and it changes whenever the nanny's tax code or the national rates change.
A worked example: £30,000 gross in 2026/27
A nanny in England on £30,000 a year, 40 hours a week, tax code 1257L, aged over 22 and in a workplace pension at the minimum contributions. Annual figures, from HMRC's 2026/27 rates:
| Line | How it's worked out | Amount |
|---|---|---|
| Gross salary | Agreed in the contract | £30,000.00 |
| Income tax | (£30,000 − £12,570 personal allowance) × 20% | £3,486.00 |
| Employee National Insurance | (£30,000 − £12,570 primary threshold) × 8% | £1,394.40 |
| Take-home before pension | Gross − tax − NI | £25,119.60 |
| Employee pension (minimum 5%) | (£30,000 − £6,240) × 5% | £1,188.00 before any tax relief |
| Employer National Insurance | (£30,000 − £5,000 secondary threshold) × 15% | £3,750.00 |
| Employer pension (minimum 3%) | (£30,000 − £6,240) × 3% | £712.80 |
| Total cost to the family | Gross + employer NI + employer pension | £34,462.80 |
Monthly payroll uses monthly thresholds (£1,048 primary, £417 secondary), so monthly amounts can differ from one-twelfth of these by a few pence. How much the pension contribution reduces take-home depends on how the scheme gives tax relief. At 40 hours a week this salary is about £14.42 an hour, above the £12.71 National Living Wage for workers aged 21 and over from 1 April 2026. Always check the hourly rate: the same salary for 50 hours a week would be below it.
Why a net agreement costs you more
If the contract says £25,119.60 net a year, you have promised the take-home amount, and the payroll has to find whatever gross figure produces it. Anything that raises the nanny's deductions raises your cost:
- HMRC changes the nanny's tax code, for example because of a second job, a benefit or tax owed from an earlier year.
- The nanny takes a second job and this one moves to code BR, so all of this pay is taxed at 20%.
- Rates or thresholds change in a new tax year.
- The nanny starts repaying a student loan.
Say HMRC sends a code of 1000L instead of 1257L. The allowance drops by £2,570, so the nanny owes £514 more tax a year. To keep their take-home where you promised, you have to raise the gross by about £713.89 (each extra £1 of gross in the basic-rate band leaves 72p after 20% tax and 8% NI), and pay about £107.08 more employer NI on it: around £821 a year before pension. On a gross contract, the code change simply lowers the nanny's take-home, as it would in any other job.
Turning an agreed net figure into gross
If you have already agreed a net amount, convert it before you write the contract. For a nanny on 1257L whose pay sits in the basic-rate band (between £12,570 and £50,270 a year in England in 2026/27), and leaving pension aside:
- Take the agreed annual net pay, for example £25,119.60.
- Subtract £12,570, the part that is free of both tax and employee NI: £12,549.60.
- Divide by 0.72, because each £1 of gross above that keeps 72p: £17,430.
- Add back £12,570: £30,000 gross.
Our free nanny tax calculator does this for you: choose "Agreed take-home (net)", enter the figure, and it works back to the gross pay, including pension, and shows what that gross costs you in total.
Costs a family can't reduce
Many employers can claim the Employment Allowance (£10,500 off employer National Insurance in 2026/27). GOV.UK says it can't be claimed for someone you employ for personal, household or domestic work, like a nanny, unless they are a carer or support worker. So budget for the full employer NI. If you are eligible for Tax-Free Childcare, GOV.UK says you can use your childcare account to pay the nanny's income tax and National Insurance.
Where PayDocs fits
PayDocs makes your nanny's payslip each payday, showing gross pay, each deduction and net pay. PayDocs works out PAYE income tax, National Insurance and supported deductions for 2026/27 pay dates. Every line is editable, so the payslip matches your payroll record. Start with the nanny tax calculator, which hands the gross pay, tax code and pension straight to the payslip generator.
This is general information about HMRC rules for the 2026/27 tax year, as published on 7 October 2026. It is not tax or legal advice.
Questions
Should I agree my nanny's salary gross or net?
Gross. With a gross salary, tax code and rate changes affect the nanny's take-home, as in any job. With a net agreement, you have promised the take-home and pay the difference whenever their deductions rise.
How much does a £30,000 nanny cost in 2026/27?
About £34,462.80 a year in England: £30,000 gross, £3,750 employer National Insurance and £712.80 minimum employer pension, assuming tax code 1257L and an employee eligible for automatic enrolment.
Can I claim Employment Allowance for a nanny?
No. GOV.UK excludes people employed for personal, household or domestic work, like a nanny or a gardener, unless they are a carer or support worker. Budget for the full employer National Insurance.
How do I convert a net nanny salary to gross?
For a nanny on 1257L in the basic-rate band, ignoring pension: subtract £12,570 from the annual net, divide by 0.72, and add £12,570 back. The free nanny tax calculator does it including pension.
Does a nanny have to be paid the minimum wage?
Yes. GOV.UK says nannies employed by a family must get at least the National Minimum Wage, which is £12.71 an hour for those aged 21 and over from 1 April 2026.
Sources
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Employing someone to work in your home, nannies
- GOV.UK: National Minimum Wage and National Living Wage rates
- GOV.UK: Employment Allowance, eligibility
- GOV.UK: Workplace pensions, what you, your employer and the government pay
- The Pensions Regulator: Automatic enrolment earnings thresholds
Sources checked 7 October 2026. This article explains how pay documents work; it is not tax or legal advice.
