Household payroll process
How payroll works for a nanny or housekeeper
Domestic staff payroll turns an agreed gross wage into PAYE records, deductions, payslips, Real Time Information submissions and payments to HMRC. The operational sequence is: register as an employer, add the employee to payroll, calculate gross-to-net pay, submit the Full Payment Submission, give the payslip, pay the employee and HMRC, then keep the required records.
How do you run payroll for domestic staff?
Register as an employer when required, set up PAYE, collect the employee information needed for payroll, calculate gross pay and deductions, send HMRC a Full Payment Submission on or before payday, give the employee an itemised payslip, pay net wages and the amounts due to HMRC, and retain payroll records for the required period.
The calculation depends on tax code, pay period, National Insurance category, pension and other facts. This page explains the sequence, not personalised tax or payroll advice.
The domestic staff payroll sequence.
Keep the steps in this order so the employer record, payslip and HMRC submission describe the same payment.
Why should a nanny or housekeeper salary be agreed gross?
Gross pay is the contractual amount before PAYE deductions. It gives the household and employee a stable employment figure while the actual tax deducted can change with tax code and circumstances. A net-pay promise can transfer tax-code changes back to the employer in ways the household did not budget for.
The separate nanny-tax guide owns the tax definitions, employer/employee distinction and worked tax examples. This page keeps its scope on the payroll workflow.
What should the payslip and payroll record show?
Earnings before deductions.
Use the hours, salary or other contractual pay basis recorded for that pay period.
PAYE tax, employee National Insurance and other deductions.
Each deduction should be identifiable. Pension deductions and other lawful deductions should be handled according to the applicable rules and agreement.
The amount paid to the employee.
The payslip should allow the employee to understand how gross pay became the amount received.
Hours information where pay varies by time worked.
UK payslip rules require hours to be shown where pay varies according to the amount of time worked.
How long should payroll records be kept?
GOV.UK says employers must keep PAYE records for three years from the end of the tax year they relate to. Records include what employees are paid, deductions, reports to HMRC, employee leave and sickness information where relevant, tax-code notices and other payroll records listed by HMRC.
Other employment records can have different retention requirements. Keep the payroll rule separate rather than assuming every household-employment document uses the same three-year period. This is general recordkeeping information, not legal advice.
From our work: we separate the staffing fee, gross salary and payroll calculation before the placement starts.
Filipino Domestic Services' employer content uses three different cost layers. The staffing fee is the agency charge for the applicable placement route. The employee's gross salary is the contractual pay for the job. Payroll then applies PAYE, National Insurance, pension and statutory-payment rules to that employment record. Keeping those layers separate prevents a household from treating one headline “nanny cost” as if it answered every employer question.
The household brief also supplies information payroll needs indirectly: normal days and hours, full-time or part-time pattern, gross-pay budget and intended start date. Once a candidate is chosen, those recruitment fields should be converted into the final written employment terms rather than re-entered from memory into a separate payroll system.
For that reason, our before-start checklist sends households into payroll before the first payday, while the nanny-tax page explains the legal payment concepts separately. This page then owns the operational sequence: register, add the employee, calculate, submit, pay, issue the payslip and retain the record.
We do not recommend a particular payroll bureau or invent a universal payroll fee. A household can run payroll with suitable software or outsource administration, but it should still understand the submissions and amounts being made in its name as employer.
DIY payroll or a payroll bureau?
Domestic staff payroll questions.
Do I need to register as an employer for a nanny?
Most households directly employing a nanny need to operate PAYE and register with HMRC. Use the current HMRC employer-registration guidance for the actual pay and employment arrangement.
When do I send an FPS to HMRC?
Employers normally send the Full Payment Submission on or before the employee's payday, reporting pay and deductions for that payment. Payroll software or an authorised agent can make the submission.
Does a nanny or housekeeper need a payslip?
Workers and employees have payslip rights. The payslip is normally given on or before payday and shows gross pay, deductions and net pay, plus hours where pay varies with time worked.
How long do I keep payroll records?
HMRC says PAYE records must generally be kept for three years from the end of the tax year they relate to. Other employment records can have different retention rules.
Can a payroll bureau make me no longer responsible as employer?
No. A bureau can administer payroll and submit information as an agent, but the household remains the employer and should ensure the underlying employment information and obligations are correct.
Is payroll the same as nanny tax?
No. “Nanny tax” is a shorthand for household-employer tax and payroll obligations. This page explains the operational payroll sequence; the nanny-tax guide owns definitions, PAYE/NI concepts and worked tax examples.
HMRC and employer sources.
Payroll is regulated financial administration. This page uses current HMRC/GOV.UK sources and should receive UK household-employment/payroll reviewer sign-off before production publication.
Set up payroll from the final written job, not an old recruitment estimate.
Use the gross pay, start date and working pattern that the household and employee actually agreed.