Self employed and 30 hours childcare

[wowmummy]

Hi all

Ok if I apply for the 30 hours childcare and predict I will earn £145+ a week (which I am earning well over at the moment) but say it suddenly drops what happens??

Anyone able to share an experience or advice?

Thanks ☺️

so it sounds like you need to incorporate first (to qualify as self employed) and then apply for the hours yep? so for september start date incorporate by June-July when you apply? any advice on what entity (ltd, sole trader, something else) for someone who wants to offer services like photography (ie no major expenses to offset income). thanks!

Does anyone know if you can still set up a new business as a sole trader if you expect to earn less than £1000 a year?

I earn around £200 under the threshold to qualify for the 30 hour funding for 2 year olds and can’t increase my hours in my main job 🤦🏻‍♀️ I don’t really have time to run a business or work elsewhere, but was wondering if it would be possible to set up as a sole trader and make a few crafts to sell to family and friends, purely to make up the extra £200 needed to qualify for the hours.
Thanks

I don’t think there’s a minimum requirement to register as self-employed with HMRC. And if you’re making things with the intention of selling them for a profit that would be a business regardless of profit, so I think you’d need to register anyway (even if your total earnings between your jobs are low enough that you don’t have to pay tax on it).

Note also that the eligibility may be based on profit rather than total earnings, so you may need to make £200 profit. Maybe worth a call to HMRC to check?

Thanks all.

I still don't understand how you can be registered as self employed, earn less than the income of £8,668.00 and qualify for the 15 hours by just giving your word? Yiu could also not pay tax only NI if you earn uder tax threshold. Am I missing something?! Xx

From what I understand it's because self employed business don't have the minimum threshold requirement for first 12 months

That's what I thought but just seems to good to be true! 🙂 xx

Sorry to jump on this thread! Does anyone know if the minimum earnings are based on sales or profit?

I've already used my 12 month grace period and my sales are up and down depending on the season. I have no idea yet what my profit will be in 12 months time as I'm constantly buying new stock and reinvesting into the business. My sales are definitely over the minimum amount, but I'd say my profit probably isn't purely because all my money is put straight back into the business.

It's impossible to get through to HMRC on the phone so any advice would be much appreciated!

It's your profit, your taxable income.

Hi, just wanting to jump on here as I cannot find the answer ANYWHERE!

I've just submitted my first tax return and my first year of business made a loss, my income was great but after the investment expenses my profit was a loss.

Are the 30hrs based on the profit? And if so, how can that be justified?

The scheme is set up to allow us to work, and help with the costs, if i'm not entitled is that "them" telling me that they do not accept my business as suitable work?

'They' are giving you funded childcare because you pay in to the system, tax and NI. Otherwise why would you work for free?

If you just did your tax return then you've been running your business since the 22/23 year, what is your profit now? (23/24)

In the first 12 months the threshold is waived so that people can get businesses up and running but that won't apply to you.

Hi thanks for the reply

Yes my first year was 22/23, although I’m now wondering if I’ve lost the 30 hours funding to submit my 23/24 this April as I will have shown profit

although what did you mean that the threshold being waived wouldn’t apply to me?

Thanks

Same here, I reinvested all my turnover back into stock, so on paper I only made £500 profit. I'm now having to apply for a part time job to ensure I've earned enough rather than being able to focus on growing the business 😐

Did you not pay yourself? (Genuine question, as I’m just a sole trader and freelance my services, so I don’t have stock and my ‘profit’ is my wages.)

The threshold is ultimately the same* for employed (over 23) and self-employed: £8,668 income per year, which is the equivalent of 16 hours a week at minimum wage. I think the government’s reasoning is that you shouldn’t need 30 hours of childcare if you’re working less than 16 hours a week. They allow a 12-month grace period for new businesses where you don’t need to meet the threshold earnings, but after that it seems we’re on our own. And of course the actual threshold doesn’t take into consideration the amount of unpaid hours self-employed people put into their businesses.

*For employed people the threshold (over 23) is technically £2,167 over the next 3 months, which works out as £8,668 over 12 months.

Hi thank you for your replying

I wish it were based on hours.

I work around the clock running my business, it would be so much easier working a 16 minimum wage job but the passion just wouldn’t be there

I’ll give them a call today but as someone indicated above I think because I didn’t pay tax and could not contribute towards NI then I won’t be eligible

However it might encourage me to do my books early this year to show profit and gain the 30hrs back asap

This whole thread has been really helpful, thanks for the info so far.

we are hoping to send my little boy to nursery/pre-school in September and he turned 2 this week.

my husband has been staying at home looking after him since my mat leave ended and will do until sept.

hes training as a coach and planning to set up a new business in the next few months and we were planning to then be able to apply for the new 15 free hours with me working and him as a new business in the last 12 months.

however we've just thought that will this still be possible as he is already registered as self employed for different jobs/roles...? Does anyone know if that will prevent this from happening?

Hi, I just rang up and had an honest chat with the childcare tax people on 0300 123 4097

When get your 3 monthly reminder there’s a chance they will message. Ack asking for proof of earnings. In my first year, because I hadn’t any proof and my books were not submitted to HMRC I just had to explain this and that I fell in to a sort of loop hole.

Now I have submitted my first year books, they did return a loss so my 30hrs were reduced to 15 until I called and had a chat and because I could explain how this year (23/24) I will achieve the minimum £8669.44 and submit my booked in April, they approved me at 30hrs

I hope this helps

I think someone earlier in this thread (or possibly another thread) mentioned that the 12 months is only applicable if you haven’t started a new business in the last 5 years. Worth a call to HMRC to confirm but if I’ve understood the terms correctly it would depend on when your husband registered as self-employed for these other roles he was doing in the past.

Hi all
i don’t know if anyone on this thread could help with a similar question. I have just posted a new thread trying to understand how the 12 month grace period is accounted for if it spans over two financial years (in this case August - August) but tax return is April-March. If second year includes 5 months of grace period and 7 months of non grace period for earnings, how do they assess eligibility for 30 hours in year 2?

is it simple as prorating the £8700ish min earnings over the period? I’m hoping…

Hi if anyone could help me I’d really appreciate this. Just applied for my youngest (2.5 yo) to start nursery with the 15 hours free funding as I was easily working 16+ hours a week. I have a zero hour contract and my hours have been drastically cut. What happens if I earn a lot less one month than the others ? Will I need to repay for the child care? Any help very much appreciated thanks

Hi, I'm newly self employed and have a little boy in nursary. Looking at the tax free childcare page, it says newly employed people can claim and earn less for the first 12 months, does anyone know what the lower limit is? Tia

HMRC are now carrying out more checks on those declaring themselves self employed. When the funding codes need to be renewed HRMC are likely to ask for evidence of income earnt. If a tax return has been completed they will view this. I've also seen parents have HMRC investigations opened up where they have declared they will earn the minimum amount of £186 per week yet have not declared all earnt income when filing their end of year tax return. HMRC have identified possible fraudulent loopholes are are now carrying out more checks and opening up fraud cases

Not for the first 12 months as there is no requirement to make a profit, you can make a loss.

There is no lower limit you can make a loss for the first 12 months. The poster above is referring to people who have been self employed for 12 months plus.

Checks can still be made to ensure that the self employment is genuine. I've seen plenty of posters on here being advised to pretend to be SE to get the funded hours.