What Happens If I Pay My Nanny Cash-in-Hand?

It might seem easier to hand your nanny cash each week and skip the admin, but paying “cash-in-hand” can create serious problems for both you and your nanny.

Here’s what actually happens when you avoid running proper payroll.

Why Paying Cash-in-Hand Is Risky

Even if you pay fairly and on time, HMRC classifies unreported income as illegal employment.
Once your nanny earns more than £123 per week, you’re legally an employer.

Paying cash-in-hand means:

• ❌ No tax or National Insurance is being paid.

• ❌ No pension contributions are made.

• ❌ No payslips or employment record exist.

If HMRC finds out, you could face penalties, back-dated tax bills, and fines for not submitting payroll under RTI (Real Time Information).

The Hidden Impact on Your Nanny

Your nanny loses out too:

• No access to maternity pay, sick pay, or paid holidays

• No National Insurance credits toward their state pension

• No proof of income for mortgages or loans

What feels “simpler” in the short term often hurts both sides long-term.

What HMRC Can Do

HMRC can:

• Backdate unpaid tax and NI (often several years)

• Charge interest and penalties

• Investigate further if they suspect intentional non-compliance

Even an accidental mistake can be stressful to fix — and costly.

The Right Way to Pay

Running payroll keeps you compliant and transparent.
It doesn’t mean you can’t still pay your nanny by bank transfer or cash — you just need to record it through PAYE and issue a payslip each time.

How Hirelo Helps

Hirelo automates the legal side:
✅ Registers you with HMRC
✅ Calculates tax, NI and pension automatically
✅ Sends real-time reports to HMRC
✅ Creates payslips and P60s

You simply enter the pay — Hirelo handles the rest for £125 per year.

💡 Avoid HMRC penalties and protect your nanny — start payroll the right way today with Hirelo.