If you are self-employed and claiming Working Tax Credit (WTC), you may have been contacted recently by HM Revenue & Customs (HMRC) and asked to provide evidence that you are aiming to make a profit, working regularly, keeping good business records and following any necessary regulations. These are government requirements for receiving WTC.
The Tax Credit Office is contacting some self-employed recipients of WTC whose average hourly profit is less than the National Minimum Wage, which is currently £6.70 per hour, and will rise to £7.20 in April.
If you are contacted, you may be asked to provide the following documents:
- records of your earnings and hours worked
- invoices for the work you’ve done
- receipts for expenses you’ve paid
- a business plan, and how this was put into place
- how you promote your business and how it is run on a day-to-day basis
You should also be aware that WTC is gradually being phased out and replaced by Universal Credit (UC). If you receive WTC, you will be eventually be moved onto UC when it is introduced in your area. More information about UC is available here.
If you are a PACEY member, we have a number of resources to support you, including:
Business Basics - getting started as a childminder
Building your childminding business
Practice guides on: Working with others, Professional Practice, Record keeping
Factsheets on: Pensions, Promoting your Business, Social Media and your business, Employing assistants
Starting your own business - Training and webinars from HRMC
Members are also able to receive one-to-one support for help with their childcare business - book a call on 0300 003 0005.
PACEY is in regular contact with HMRC and the Department for Work and Pensions (DWP) to ensure officials have a better understanding of the realities of childcare businesses and how changes to WTC and UC may affect PACEY members. Following PACEY raising this issue with our senior contact, HMRC has committed to work with PACEY to ensure that future requests of childcare professionals reflect their working arrangements. For instance, we have reassurance from them that providing a business plan may not always be appropriate for a childminding business and that this will be taken into account. We will continue to work with HMRC to ensure that they take into account other practical considerations relevant to childminding.
If you would like to share how you have been affected by changes to WTC, or if you have any questions about our public policy work, please send an email to firstname.lastname@example.org and we will do our best to get back to you as soon as we can.