Crackdown on cash-in-hand childcare

Government reveals plans to target tax avoidance by parents who pay cash-in-hand for nannies

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The Government has revealed it plans to crack down on parents who avoid tax on their childcare costs, by paying for nannies with cash-in-hand.

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Tax inspectors for HM Revenue and Customs (HMRC) have warned mums and dads that they’re easy to track down, reports the Daily Mail.

“We expect to catch more parents who are avoiding Pay As You Earn (PAYE) in the next year,” a HMRC spokesman said.

“It’s not particularly hard to find them. When a nanny leaves and starts a new job, it often becomes clear that previous payments had not been made,” he added.

Parents paying a salary to their nanny are expected to pay employers tax and National Insurance contributions. But many feel this is unfair as they have already been taxed on the money as they earned it. Add this to the increasing costs of childcare and it’s not surprising parents are trying to find a way to cut costs.

But if they’re caught they face paying all the missing tax in a lump sum, plus an 100% fine. This would be around £19,000 for a live-in nanny in London, the Daily Mail has estimated.

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