Free childcare- do gratuities count toward the minimum income?

Sam_S3

Hi, my wife’s 16 hour per week job at a restaurant is being cut to 15 and a half hours a week, placing her below the threshold for being able to claim the free childcare. However she also gets paid gratuities as TRONC through her payslip, to the level which puts her above the threshold again. I believe that as this is taxed that it should count toward the minimum income to claim the free childcare, but I’m not certain and can’t work it out. Does anyone know the answer to this please?

thanks

sheramber

.

What counts as employed income?

Any earnings that a person receives from any employment under a contract of service of any office, including an elected office, counts towards the threshold.

It is gross income that counts for TFC purposes - before any deductions for tax, national insurance or pension contributions.

Earnings are given the same meaning as in Section 62 ITEPA 2003. This includes:

• Any salary, wages or fee
• Any gratuity or other profit or benefit of any kind obtained by the employee if it is money or money's worth
• Anything else that constitutes an emolument of the employment

The last two bullet points ensure that all money payments that are similar to earnings are included - that includes bonuses, commissions, tips, overtime pay. It also includes non-cash earnings such as benefits in kind, for example, a company car or medical insurance.

https://revenuebenefits.org.uk/tax-free-childcare/guidance/who-can-claim/eligibility-conditions/paid-work#what%20counts%20as%20employed%20income

Sam_S3

Thanks for your reply, very helpful. We are pleased!