We at Stafftax have long been stressing the importance of employers agreeing a gross salary with their staff rather than a net.
How does a net salary affect my auto enrolment costs?
When you agree a net salary, you are contractually obliging yourself to pay that amount into your employee's bank account each week/month regardless of other factors. When auto enrolment begins to affect you, you will be responsible for paying the employer contributions and the nanny’s contributions yourself.
At the moment, the contributions are 1% of the nanny’s annual gross salary from the employer, 0.8% from the employee and 0.2% from the government (2% total per annum) however by the end of 2018, the contributions will have risen to 3% from the employer, 4% from the employee and 1% from the government (totalling 8% per annum). If you are still on a net agreement with your nanny you could be paying an 7% on top of her gross salary into the pension pot instead of the required 3%.
The contributions start out fairly small but with the percentage increases it could become very costly if you do not take action to switch from a net to gross salary.
How do I switch?
You can speak to a payroll advisor either by calling 020 3137 4407 option 2 or emailing firstname.lastname@example.org.
How do I get general advice about the auto enrolment service?
You can speak to an auto enrolment specialist by calling 020 3137 4573.