Nursery World - Parting company

The loophole that allowed nannies to be paid through a limited company, or personal service company (PSC), was abolished at a stroke in this month's Budget. This had been predicted in Professional Nanny back in January, but what probably took many by surprise is that the Inland Revenue outlawed it with immediate effect from 9 April - though accounting firms had continued to promote PSCs right up to Budget day. So what do the nannies and employers who signed up to them do now? Stephen Vahrman, managing director of the payroll service Nannytax, says, 'Nannies who have used PSCs should make sure that the parents they work for open a PAYEscheme and employ them correctly - backdated to 9 April. We hope that PSC scheme providers will close the schemes at no extra charge to nannies, but since their claims for their schemes rarely spelled out the risks involved, including their closure, we would not rely on this and we suggest that nannies urgently check to make sure their own companies are shut down properly.

Stephen Vahrman, managing director of the payroll service Nannytax, says, 'Nannies who have used PSCs should make sure that the parents they work for open a PAYEscheme and employ them correctly - backdated to 9 April. We hope that PSC scheme providers will close the schemes at no extra charge to nannies, but since their claims for their schemes rarely spelled out the risks involved, including their closure, we would not rely on this and we suggest that nannies urgently check to make sure their own companies are shut down properly.

'These nannies will have lost potential redundancy pay entitlement by not being an employee, and they will also have to complete self-assessment tax forms as they have become company directors.'

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