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We all know juggling school holidays is tough for working parents and the costs can escalate faster than Weetabix dries to the breakfast table. I’m sure we would all love to take the time off with the family, however, whether you are working for an employer or self-employed this is not always possible and can be highly disruptive to working patterns. It puts a great deal of pressure on parents when quite frankly you have enough on your plate.
Did you know tax-free childcare is a government scheme available to working parents with children from 0-11 years?
Who is it for:
- For working families, including self-employed, in the UK
- With children under 12 (or under 17 if disabled)
- For every £8 you pay in, the government will add an extra £2, up to £2000 per child per year
With the summer holidays fast approaching this is definitely something all working parents should be looking into.
This government scheme has been made available to help contribute towards childcare costs which may mean fewer employees will need time off at the same time.
Eligible parents can get up to £2000 per child, per year to spend on qualifying childcare! For example, employees with 2 children, could be a £4000 per year saving on the family’s budget.
Tax-free childcare isn’t just for everyday childcare costs such as childminders, nurseries and nannies’ parents can also use the it to pay towards costs of (qualifying):
- Afterschool clubs
- Summer camps
- School holiday activities
The key here is that the provider must be signed up to the scheme.
To apply or check if you are eligible please visit www.childcarechoices.gov.uk
Tips for your first year of self employment
- Register as self employed with HMRC – needs to be completed within 3 months of first income received. You will need to National Insurance number, home address and business details. You will need a Government Gateway account to submit your return online. here
- Book-keeping – Record all income/expenses you are legally obliged to keep adequate records – here. Can claim start-up expenses. Keep a log!
- Timelines for accounting – here
- Make payments on time to avoid HMRC penalties.
- Note payment on account here
Payments on Account
From experience, this HMRC system can really sting in your first year/first year your self assessment bill exceeds £1000. Payment on account (POA) is a tax payment paid twice a year by self-employed people to spread the cost of tax over the year. The instalments are advance contributions towards your self assessment tax bill.
Calculated as 50% of your previous year’s tax bill and paid in two instalments.
BEWARE: If this is your first time paying POA you will be expected to pay 150% of your tax bill at once.
If your tax bill is £4000
- you will be required to pay this by midnight 31 January. On top of this, you will have to pay your first instalment of £2000 by midnight on 31 January.
- Followed by the second instalment of £2000 by 31 July
- When you complete your next self assessment tax return you will have already paid £4000 towards it.
- If you owe further tax the balancing payment will need to be made by 31 January
- If you have overpaid you will be due a rebate
POA is not optional!