If you employ a nanny or other domestic workers in your home, you must pay at least the National Minimum Wage (NMW) or National Living Wage (NLW). These rates are increasing from 1 April 2025.
New Wage Rates From April 2025
- National Living Wage (21 and over): £12.21 per hour
- Ages 18 to 20: £10.00 per hour
- Under 18s:: £7.55 per hour
- Apprentices: £7.55 per hour
All rates quoted are the GROSS hourly rate, therefore, before deductions like Tax, NI and Pension. If you pay your employee on a NET PAY arrangement you will need to ensure the GROSSED UP rate meets the specified minimum rates.
Who Do These Rates Apply To?
- National Living Wage: Required for all workers aged 21 and over.
- National Minimum Wage: Applies to younger workers and apprentices.
Domestic workers: Nannies, housekeepers, and other employees working in a private home must be paid at least the minimum wage.
How the Accommodation Offset Affects Minimum Wage
If you provide your nanny with live-in accommodation, an accommodation offset applies. This is a set amount that can be deducted from their wages instead of charging rent.
From April 2025, the offset rate is £9.99 per day (£69.93 per week). If you deduct more than this, it could push their pay below minimum wage, which is illegal.
More details: GOV.UK Accommodation Offset
Avoiding Common Minimum Wage Mistakes
- Unpaid extra hours: If your nanny works additional time (e.g., staying late), you must pay them for it.
- Deductions for expenses: Charging for uniform, food, or training can reduce their pay below the legal minimum.
- Incorrect classification: Nannies are employees, not self-employed, so they must receive at least the minimum wage.
What Happens If You Pay Below Minimum Wage?
Failing to meet these wage rates can lead to serious consequences:
- Fines: Up to 200% of the underpayment per worker (capped at £20,000 per employee).
- Back pay: HMRC can force you to pay any shortfall, including past years.
- Public naming: The government publishes a list of employers who break minimum wage laws.
More information: GOV.UK Employers’ Minimum Wage Compliance
If you employ a nanny or household worker, it’s your responsibility to keep up with these rules. Keeping proper payroll records and ensuring your employee is paid correctly will help you avoid penalties. Having a payroll provider like Pay My Nanny to help you meet your employer’s obligations and maintain payroll records is invaluable.