Property Income Excluded from Free Childcare Hours

LondonBaby

Does anyone know why property income is excluded from the calculation when working out the eligibility for the 15 free hours of childcare?

It seems to be a very specific form of income to pick on.

p00hsticks

I would imagine it's because it;s not classed as 'earned' income - presumably interest from savings or dividends from investments are also excluded ?  . 

LondonBaby

Yes - interest and dividends are also excluded but surely there are many other incomes that are made without ‘performing work’? E.g royalties.

Income from property does actually require work and without doing that work, the income would not be generated. 

Renting property is my main job, which takes up my time with admin/organising maintenance etc. and I am unable to include this in order to qualify for childcare hours.

I submit Self Assessment Tax returns for the income so I just don’t understand why it’s picked out as an exception.

p00hsticks

LondonBaby said:

Renting property is my main job, which takes up my time with admin/organising maintenance etc. and I am unable to include this in order to qualify for childcare hours.

Not something I'm really familiar with but I imagine that there are ways a professional landlord could arrange their business so that the property is owned by and the rent goes into a company and they then drew a salary out as director, which I think would then count as 'earned income' for the purposes of the free childcare - but that woudl be a big change and I suspect has a number of downsides.

sheramber

LondonBaby said:

Does anyone know why property income is excluded from the calculation when working out the eligibility for the 15 free hours of childcare?

It seems to be a very specific form of income to pick on.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/childcare-service-helpline

Kestrel_Patrol

I bet that you are not so keen to consider the rental income as earned income if it meant paying National Insurance on it? 

LondonBaby

Kestrel_Patrol said:

I bet that you are not so keen to consider the rental income as earned income if it meant paying National Insurance on it? 

More than happy to pay NI as this is my main income. But thank you for your helpful comment.

ileven1225

I called goverment, forgot the number I used, then they told me Rental Income can be part of income for Childcare benefits? They would mainly look at self assessment figure. The information I was told was very different from what you said? Where did you get the information and can you send the link?

In addition, just looked into the goverment website 

https://www.gov.uk/free-childcare-if-working/check-youre-eligible

'

Certain types of income will not count towards the minimum amount you must earn to be eligible.

These include:

• dividends
• interest
• income from investing in property
• pension payments

'

I believe the key difference is between 'investing in property' and 'managing property'. I believe investing is very passive but manging by yourself is more active and shall be counted as eligible income.