Making Tax Digital for Self-Employed Nannies —
Employed vs Self-Employed Status Explained
Most Nannies Are Actually Employed — This Changes Everything
HMRC treats most nannies working in a single family's home, on set hours, using the family's equipment and following their instructions, as employed by that family, not self-employed — even if both sides would prefer a self-employed arrangement for simplicity. This matters enormously for MTD, because employed income is handled through the family's PAYE payroll (they become your employer and must register as one), and MTD for Income Tax doesn't apply to it at all.
Genuinely self-employed nanny work typically looks like: working for several different families on a flexible, ad-hoc basis, setting your own rates, providing your own equipment, and having real freedom over how and when you work. If you're unsure which category you fall into, this is worth getting right, since misclassifying employment status has consequences beyond just MTD.
Nanny Shares and Multiple Families
Nannies who genuinely work self-employed, often through nanny-share arrangements across two or three families, or via a nanny agency that places them on a self-employed basis, do have MTD-qualifying income from that work. Every family's payments combine into one qualifying income figure, regardless of how the hours are split between households.
Records If You Are Genuinely Self-Employed
Most nannies are employees, and their pay is outside MTD. If you really are self-employed, working for several families with your own rates and control over how you work, your records should show each family.
- Record each family: hours, rate, invoice and payment date.
- Keep contracts or agreements showing how you are engaged.
- Record nanny-share arrangements, noting how the fee is split.
- Keep paediatric first aid, insurance and DBS costs.
- Keep mileage and activity costs you pay without reimbursement.
Where Nannies Go Wrong on MTD
- Assuming self-employment. If a family treats you as an employee, your pay is employment income.
- Counting payroll pay. Income through a payslip does not count for the threshold.
- Mixing families. Several families add together in one total.
- Forgetting extras. Overnight and holiday payments add up.
- Skipping first aid costs. They are allowable if you pay them.
A Sample Quarter: What the Update Looks Like
A sample quarter for a self-employed nanny with two families.
| Q2: 6 July to 5 October 2026 | Amount |
|---|---|
| Family A (part-time) | £3,900 |
| Family B (nanny share) | £2,800 |
| Occasional and holiday cover | £900 |
| Total income | £7,600 |
| First aid and insurance | £260 |
| Mileage and activities | £410 |
| Phone and admin | £140 |
| Total expenses | £810 |
| Profit for the quarter | £6,790 |
If your pay comes through payroll, none of this applies. Check your status before assuming MTD affects you.
Worked Example
Family A (regular 2 days/week): £9,600
Family B (regular 2 days/week): £9,100
Family C (occasional ad-hoc cover): £4,800
Total qualifying income: £23,500 — above the £20,000 threshold, below £30,000. Ivy joins MTD from April 2028. Because she genuinely sets her own hours, rates, and works across multiple families with real flexibility, her arrangement fits the self-employed pattern rather than being employed by any single family.
What You Can Claim (Genuinely Self-Employed Only)
- DBS checks and first aid certification
- Activity equipment and resources you provide yourself
- Travel between families at 55p/mile if not reimbursed
- Public liability insurance
- Childcare qualifications and CPD courses
- Ofsted registration costs if registered as a home childcarer
If you're employed by a family instead, these expenses generally aren't claimable in the same way — your employer handles tax through PAYE and different rules apply.
Best MTD Software for Self-Employed Nannies
Software links are affiliate, help fund CheckMyMTD. Recommendations based on ease of use for self-employed income tracking.
Frequently Asked Questions
Am I self-employed or employed as a nanny?
It depends on the real working arrangement, not what either side calls it. Working set hours for one family, using their equipment and following their instructions, generally means you're employed by that family. Working flexibly across several families, setting your own rates, is more likely genuinely self-employed.
If I'm employed by a family, does MTD apply to me?
No, if a family employs you through PAYE, that income is handled through their payroll and MTD for Income Tax doesn't apply to it, regardless of how much you earn.
I work for two families in a nanny share. Do both payments count?
If you're genuinely self-employed in that arrangement, yes, both families' payments combine into one qualifying income figure. If either family actually employs you, that portion is excluded.
Can families choose whether to treat me as employed or self-employed?
Not really. HMRC looks at the actual working relationship, not a preference either side has. Getting this wrong can create problems for both the nanny and the family down the line.
What about au pairs specifically?
Au pair arrangements typically involve board and lodging alongside a modest allowance and are usually treated differently to standard nanny employment. If you're unsure how your specific arrangement is classified, it's worth checking directly rather than assuming.