Free childcare in your first year of trading.
You are eligible to the 30 hours Free Childcare and the Tax-Free Childcare if you are self-employed. What’s better is, the earnings limits are not applicable in your first year of trading. i.e. you don’t necessarily have to earn anything if the first 12 months to be able to take advantage of the 30 hours free childcare for your 3-4 year old(s)!
“But that sounds a bit too helpful” I hear you say …. Well, yes – it is! So I called the HMRC, spoke to a lovely man there who confirmed that yes! – in your first year of trading, you can apply for both the tax free childcare scheme and the 30 hours free childcare and (provided you meet all the other criteria) you’ll get it. No catch. You don’t have to pay anything back at the end. Hurrah!
The mildly annoying bit with the 30 hours is that you need to ensure that your registration date for self-assessment is in line with the term times in order to make the most of the full 12 months allowance waiver.
HMRC Registration: April 1st
Time Taken for self assessment code: approx. 2 weeks
Gateway Registration application: Mid-April
Time taken to get codes etc: approx. 1 week
Can’t use code until: September Autumn term.
I use these dates as an example as that’s what I did and that’s why I know about the frustration …. The deadlines to use your code for the following term are March 31st, August 31st & December 31st.
You will have to re-confirm your status every 3 months and, if after 12 months you are not earning the average required income (or not meeting the other criteria) then you wont be eligible any more.
The average income at date of writing is £6514 per year – they average this out to around £125 a week.
So what do you have to do?
1) Register for self assessment with HMRC https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
2) Create a Government Gateway account with HMRC if you haven’t already: https://childcare-support.tax.service.gov.uk/par/app/trialmessage
3) Sign in and click on the ‘I’m new, what do I do’ link and follow the instructions.
This is all fairly un-detailed information as I don’t want to waffle on too much. There are so many different variations and allowance criteria that if you want more information, you can go here for details on the help available and rules: https://www.gov.uk/help-with-childcare-costs
Note: you can’t just open and close new businesses each year to keep getting the 1st year trading waiver … the HMRC have checks in place to make sure this doesn’t happen. If you are struggling after your first year or have any questions about it, then it’s worth a call to them to discuss it.
Note: If you get tax credits, they may be affected by opting for the tax free childcare scheme … check first!
The helpline for Childcare support is: 0300 123 4097
if you have any questions, please do contact me … firstname.lastname@example.org