Understanding Net Versus Gross Pay for Household Staff
A Guide for Nannies, Housekeepers, and Families
When hiring or working as a nanny, housekeeper, or other domestic staff, it’s essential to understand the difference between net and gross salary. Misunderstandings around this can lead to confusion, incorrect budgeting, and issues with HMRC. This guide explains the terms in clear, simple language so that everyone involved—families and candidates alike—has clarity.
A Quick Note on History
Historically, many domestic roles were paid in net terms, often informally, with salaries treated more like pocket money than formal employment. However, the landscape has changed significantly. Domestic staff roles, particularly for professional nannies and housekeepers are now seen as serious, regulated employment. That’s why the industry has shifted toward gross salaries, in line with all other UK employment.
What Is Gross Salary?
Gross salary is the amount agreed between the employer and employee before any deductions such as tax, National Insurance, or pension contributions. It’s the figure shown in contracts and used for payslip calculations.
It’s important to note that the employer will also be responsible for employer National Insurance contributions and may need to provide pension contributions, depending on the role and hours. These are standard costs associated with employing staff in the UK.
What Is Net Salary?
Net salary is the amount the employee receives after tax and National Insurance have been deducted. It’s the figure that appears in the candidate’s bank account each week or month.
For example, if a nanny’s net pay is £500 per week, that is the take-home amount after deductions have been made.
Why Gross Salary Is Better for Everyone
- Clarity: Gross salary ensures transparency for both parties.
- Compliance: It aligns with HMRC and UK employment law.
- Budgeting: Families can accurately plan for the full cost of employment.
- Fairness: Candidates are protected from confusion around tax codes or unexpected deductions.
At HomeOrganisers, we always recommend that all salary discussions take place in gross terms to protect both client and candidate. It helps everyone understand the real value of the offer and supports a smoother hiring process.
Useful Tip
You can use the Nannytax calculator to get a quick view of how gross and net salaries convert:
Use the Nannytax Gross-to-Net Salary Calculator
Need Help or Advice?
If you're a family unsure how to budget for a nanny or housekeeper, or a candidate confused by job adverts mentioning net or gross pay, we’re happy to explain the options. Just get in touch.
Contact HomeOrganisers for guidance tailored to your situation.