Paying Grandparents for Childcare

This probably isn't in the right section but I was struggling to find an appropriate one.

We will shortly be paying a grandparent £1000 a month in return for childcare.

Despite trying to do some reading I am struggling to understand the tax / national insurance consequences of this if there are any at all.

Is it possible to simply gift 12k a year or is there a downside to this?

Comments

  • Savvy_Sue
    Savvy_Sue Posts: 46,018 Forumite
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    Where are they providing the care, in your home or in theirs? If in theirs, I believe they have to register as a childminder with Ofsted. But my information may be out of date.

    Are you employing them? If you are, then you need to register as an employer with HMRC, and they will be entitled to paid holidays and statutory sick pay. Being an employer at this kind of level isn't that difficult, tbh, and HMRC have lots of helpful information for new, small employers.

    Or are they going to be self-employed, which is the normal situation for childminders? In which case, they'll have to do an annual self-assessment and pay their own tax and NI. They wouldn't be paid for holidays in that situation.

    At their end, what other income do they have? If none, then they'll have very little tax or NI to pay, whichever way round it is.

    And finally, what's your backup position if they're ill, or something else doesn't work out?
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  • Spendless
    Spendless Posts: 24,147 Forumite
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    My understanding of it is that Grandparents do not have to be registered as childminders to receive payment but they do if the parent/s are claiming tax credits/childcare vouchers to pay for the care. The Grandparents would also need to be caring for another (non-related) child not just grandchild/ren.

    http://www.grandparentsplus.org.uk/providing-childcare
  • Im an ofsted registered childminder. I look after my grandson also i looked after other none relatives. I was told i could only childmind my own grandchild if i chilmind none relatives. My none relative children are now leaving my setting. What do i now do with my grandchild who i mind. My daughter would have to give up work as my granchild has health issues. What happens
  • kingfisherblue
    kingfisherblue Posts: 9,203 Forumite
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    Carol555 wrote: »
    Im an ofsted registered childminder. I look after my grandson also i looked after other none relatives. I was told i could only childmind my own grandchild if i chilmind none relatives. My none relative children are now leaving my setting. What do i now do with my grandchild who i mind. My daughter would have to give up work as my granchild has health issues. What happens

    It's usually best to start your own thread if you have a specific question.

    Are you still prepared to childmind for non-relatives? Are yo currently advertising for more children?
  • Savvy_Sue
    Savvy_Sue Posts: 46,018 Forumite
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    Also I think the rules may have changed so that you don't any longer have to mind non-related children. But I'm not sure.

    You'd get a definitive answer from Ofsted if you know how to contact them, or from your local authority Early Years Team, or from PACEY. Link to contact EYT via PACEY, and EYT would help you advertise if you do need to take other children.
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  • jackyann
    jackyann Posts: 3,433 Forumite
    To answer the first question, there are no rules about grandparents looking after children, unless the parent is claiming some sort of tax credit / using vouchers as Spendless said. The idea is that the GP can do as they like BUT if public money is involved, then they need to demonstrate that they adhere to Early Years Standards.

    So, if OP is not going to be claiming any of those, they can just hand over money as suits the family.
    The exception, as I understand it, is the question of NI credits. If both parents (or a single parent)is paying NI, then they can transfer their Home Responsibility NI credit to the grandparent if relevant - that is the grandparent would otherwise be in a job where they would pay NI(you can look this up on gov.uk)

    Carole - I think you need to check, as Savvy Sue suggested (I think she is correct,). Your local Children's Centre could probably also help.
    As your grandchild has health issues, there may be specific help available as slightly different rules apply to families with ill or disabled children. These people have good information: https://www.cafamily.org.uk/
    I hope you can sort something out.
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