If you mind 3 or fewer children in your own home at any one time, and earn no more than €15,000 per year, 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. This scheme applies to your childminding earnings only.
To qualify for it, you must mind no more than 3 children (0-17) at any one time and have informed Kildare County Childcare Committee in writing of your service. To claim it, you must be registered as self-employed person with your local tax office. Even though you have no tax liability, every October you will need to file a tax return annually when Revenue sends you the form. The common date for the payment of tax and filing of returns is October 31st.
Under this scheme, you are NOT liable for the Universal Social Charge (USC), but you may make PRSI contributions (Class S). This is set at the minimum amount for those claiming this relief. Currently PRSI minimum contribution is €500 per annum.
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.
How do I register for tax?
Complete a TR1 Tax Registration Form and return it to your local tax office.
You will need a PPS number. Don’t worry if you don’t have one – just contact your local Social Welfare Office and it will be issued to you.
When does a childminder need to pay tax?
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, i.e. 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, cookers, 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.
What about VAT?
Childminding is exempt from VAT for Pre-school children. For more information please visit the Irish Revenue Service website www.revenue.ie