If you mind 3 fewer children in your own home at any one time, and earn no more than €15,000, this scheme is for you! The Childminders’ Tax Relief means that a childminder can earn up to €15,000 gross per annum without paying tax. Since you cannot deduct any expenses, there is no need to keep detailed accounts. Also the scheme applies only to your childminding earnings, so even if you work another job part-time, it will not affect your right to claim this exemption.
To qualify for it, you must mind no more than 3 children (0-17) at any one time and have informed your local Childcare Committee of your service. To claim it, you must be register as self-employed with your local tax office. Even though you have no tax liability, every October you will need to file a tax return when Revenue sends you the form.
Under this scheme, you are NOT liable for the Universal Social Charge (USC), but you may make PRSI contributions (Class S). Self-employed persons pay Class S PRSI at the rate of 4%, subject to a minimum payment of €500. Class S PRSI allows you to claim the following benefits: State Pension (Contributory) • Guardian’s Payment (Contributory) • Widow’s or Widower’s (Contributory) Pension • Maternity Benefit • Adoptive Benefit • Bereavement Grant.
Once your gross income per annum is over €15,000, then you are liable for tax on the entire amount less your personal tax credits. Tax is paid on net income, e.g. profit after allowable expenses have been deducted. Profit = Turnover – Allowable expenses – Capital Allowances. You can claim for any business expense which you have incurred in order to earn your profits. As a rule of thumb, you can offset 1/3 of expenses. You can claim capital allowances on assets which are of lasting use to your business. Dishwashers, vacuum cleaners, microwaves and fridges may be included in this.
Once you are liable for tax, then you are also liable for PRSI Class S contributions at 4% of reckonable income – subject to a minimum payment of €500. You are also liable for the Universal Social Charge (USC) on your gross income at 4% or 7% if your income is over €16,016.
As a self-employed person you must make annual tax returns. Revenue will send you a form to fill in and return. The system known as ‘Pay and File’, allows you to file your return and pay your tax at the same time. The common date for the payment of tax and filing of returns is October 31st.
Childminding is exempt from VAT for Pre-school children. After school care is not exempt, but only if your turnover from this segment of your business exceeds €37,500 should you register for VAT.
The following links to Revenue and citizens information provide guidance on registering as a self-employed person:
The Childcare Services Relief is available to childminders caring for 3 or less children in their own home: