Family Day Care Provider's Guide

Introduction

'Family Day Care Providers' are considered to be self-employed and must declare their income to the Income Tax Office. The following paragraphs outline the expenses which can be claimed against gross fees received and the records to be kept.

Expenses directly related to Family Day Care Provider's activities

Any expenses directly related to earning the Family Day Care Provider fees are allowable for tax purposes. The type of expenditure allowable includes food, drink, stationery, toys, books, fares for outings, etc.

Heat and Light

Full time Family day Care Providers, i.e., those who care for children in their own home for 40 hours a week or more, can claim a deduction of one-third of household fuel bills. Part-time Family Day Care Providers can claim a scaled down proportion, i.e., a Family Day Care Provider who works for 20 hours per week can claim one-sixth of household fuel bills.

Rent and Rates

Fulltime Family Day Care Providers can claim a deduction of one-tenth of rent and rates paid. Part-time Family Day Care Providers can claim a scaled down proportion.

Motor expenses

If a motor vehicle is used for picking up children, trips to the zoo, etc, the petrol expenditure on such trips can be claimed as an expense. In addition, capital allowances can be claimed on the cost of the vehicle, restricted to the following proportion:

Mileage of vehicle used exclusively for Family Day Care activities

Total mileage of vehicle throughout the year

As an alternative to these expenses, a deduction of 50p per business mile may be claimed. Please note that this is in lieu of both running expenses and capital allowances.

Capital expenditure

Capital allowances can be claimed on capital items purchased solely for Family Day Care activities, e.g., playpens, cots, etc, from the year in which the items are purchased.

Wear and Tear of household furnishings

Family Day Care Providers can claim one-tenth of their gross fees to cover "wear and tear" of household items not used exclusively for Family Day Care activities. No capital allowances or other deductions can be claimed for those items.

Example

Income:	Fees for 3 full time children		£36,000
Expenses:	Direct expenses (as in cash book)	£ 3,150
	Heat and Light (1/3)	£     625
	Rent and Rates (1/10)	£     500
	Motor Expenses (50p per business mile)	£     350
	Wear and Tear (1/10 of income)	£ 3,600	£  8,225
Net Profit:			£  27,775

Keeping Records

Weekly income and expenditure records should be kept in order that an annual income and expenditure account can be prepared and forwarded to the Income Tax Office together with the Provider's, or spouses Income Tax Return.
A Simplex cashbook, or something similar, is available at local stationery outlets and may be found useful for recording income and expenditure. Receipts for the expenses directly related to earning the Family Day Care fees will not normally be required to be produced to the Income Tax Office. They should be kept, however, until the profits for a particular year are agreed by this Office. The cost and date of items on which capital allowances are claimed must accompany the income and expenditure account.

CHILD CARE RELIEF

Child Care Relief was introduced to help those who have to pay for their children to be looked after while they go out to work. Family Day Care Providers are required to supply a certificate annually to the claimant, as provided by the Income Tax Office, showing how much was paid for the child's care.

Note: The tax relief is only given if the Family Day Care Provider (playgroup, nursery) is registered with the Education Department.

Further advice on any of the topics in this document can be obtained from the Income Tax Office Help Desk on (01534) 440300.