Financial support for self-employed childminders in Northern Ireland during Covid-19

Introduction

The Covid-19 pandemic has had a significant impact on individuals and businesses across Northern Ireland. With the closure of childcare settings to all but vulnerable children, and the children of key workers, childminders have seen a significant decline in their income, with many having no option but to close temporarily.

Unlike day nurseries and out of school settings, childminders are typically self-employed. This means that they cannot access support through the Government’s furlough scheme, but instead can apply for support through the Self-Employed Income Support Scheme. Some childminders will also be eligible for support through Tax Credits or Universal Credit at this time.

These various forms of support are separate to any financial support provided through the Northern Ireland Executive as part of any Covid-19 Childcare Support Package in Northern Ireland.

The information below is intended to explain the various forms of support that childminders may be eligible for.

It is important to note that, depending on your circumstances, you may or may not be eligible for each of these forms of support – however make sure you take advice, so you do not miss out on any support for which you are eligible.

Self-Employment Income Support Scheme

The UK Government set up a scheme to support those who are self-employed. In the first round of the scheme, covering the months April to June, it will pay out a single taxable grant of 80% of your average monthly trading profits, covering a three month period, and capped at £7,500. You must have an income of £50,000 or less, and make the majority of your income from self-employment. Additionally, you must:

• have traded in the tax year 2018/19 and submitted a Self-Assessment tax return for that year, on or before 23 April 2020
• have traded in the tax year 2019/20 and
• intend to continue to trade in the tax year 2020/21.

This means that, if you only started to work as a childminder in the last year, and were not previously self-employed, then you will not be eligible for this support.

Note however, provided you were working in the previous two years, self-employed new parents whose trading profits dipped in 2018/19 because they took time out to have children will still be able to claim for a payment under the Self-Employed Income Support Scheme (SEISS) – they will now be able to use either their 2017-18 or both their 2016-17 and 2017-18 self-assessment returns as the basis for their eligibility for the SEISS.

If you are eligible, your taxable grant will be based on your average trading profit over the three tax years 2016/17, 2017/18 and 2018/19. If you have only worked in two out of these three years, you may still be eligible for the grant, but it will be averaged over the years that you have worked.

Example: Calculating average trading profit

Example: Calculating the grant you will receive in the first round of the scheme

On Friday 29 May, this scheme was extended for a further three months, with those who are eligible able to claim a second and final grant in August.

The second grant will be worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

The example below sets out how to calculate the grant you could be eligible for in the second round of this scheme, based on an average annual trading profit of £7,500.

Example: Calculating the grant you will receive in the second round of the scheme

If you receive this grant, you can continue to work. You can also receive this grant alongside other forms of support, such as the Covid-19 Childcare Support payments, or payments made through Tax Credits or Universal Credit. It is important to note, however, that this grant will be treated as ‘earned income’ for the purposes of calculating Universal Credit entitlements.

Further information is available at: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Universal Credit

 You can make a claim for Universal Credit if you are not already in receipt of Universal Credit or Tax Credits. If you are already in receipt of support, a reduction in your household income could result in an increase in the Universal Credit or Tax Credits you are eligible for.

If you receive the Self-Employment Income Support grant this may affect the amount of Universal Credit you get, as it is treated as ‘earned income’ but will not affect claims for earlier periods.

In some cases, this may mean the support available via your Universal Credit award drops to zero but in others, where incomes are low, Universal Credit will continue to ‘top-up’ the self-employed person’s income until it is no longer needed. If receipt of this grant results in a ‘nil’ Universal Credit award then the Universal Credit claim should not be closed, provided earnings are reduced in subsequent Universal Credit assessment periods and a new claim should not need to be made. Surplus earnings will, however, be applied to the Universal Credit award.

Additionally, any relevant business grants or loans to aide with business recovery are payments that will be treated as capital and disregarded as business assets for the purposes of Universal Credit.

This is complex, so if you are uncertain of how this will apply to you, you can call Employers For Childcare’s Family Benefits Advice Service on 0800 028 3008 for guidance.

Are there any other forms of support? 

Depending on your circumstances, the following may be of assistance to you:

• Deferral of Self Assessment Income Tax and VAT payments.
• Mortgage relief: A three month mortgage holiday is available to customers struggling to make mortgage payments during the Covid-19 outbreak. Some banks are also offering further support to customers with personal loans. Contact your bank or building society to see what they can offer you.
• Employment and Support Allowance (ESA) – If you are self-employed, and unable to work because you are unwell with COVID-19 or have to self-isolate, you will be eligible to apply. This is based on national insurance credits and is payable from day one of sickness. ESA can be claimed on its own or at the same time as Universal Credit.

Need advice or guidance?

To contact Employers For Childcare’s Family Benefits Advice Service about any financial support you may be entitled to, call 028 9267 8200 or email hello@employersforchildcare.org