TFC10100 - Self-employed person: relevant earnings threshold

Childcare Payments (Eligibility) Regulations 2015, regulation 9(5) and (5A)

At the date of their declaration of eligibility, a self-employed person must expect to earn either:

  • a minimum of the hourly national minimum wage applicable to them based on their age for 16 hours multiplied by the number of complete weeks in the 3-month period beginning with the date of the declaration of eligibility

  • the hourly national minimum wage applicable to them based on their age on 6 April of the tax year in which the declaration of eligibility was made for 16 hours multiplied by 52. This provision is to account for fluctuations in earnings. In this scenario income from an employment cannot be combined

If the person is both employed and self-employed, they can provide evidence of their employment earnings or self-employment earnings or a combination of both to meet the minimum income requirement. However, if the person relies on the 12-month provision, based on earnings for the tax year when the declaration of eligibility was made, any income from employment will be disregarded for TFC purposes.

Example 1:

Jason is 22 and is self-employed for 35 hours per week. He submitted his declaration of eligibility on 28 March 2023 and because of his age, the national minimum wage applicable to him would be £10.18 per hour. However, as he turns 23 on 4 April 2023, under regulation 9, the national minimum wage applicable to him is £10.42. Therefore, Jason must expect to earn at least £8669.44 in the tax year in which he made his declaration of eligibility to satisfy the minimum income requirement as a self-employed person.

£10.42 x 16 = £166.72 x 52 = £8669.44

Example 2:

Sunita is 19 and is employed as a librarian for 22 hours per week. She is also self-employed for 15 hours per week. The national minimum wage applicable to Sunita is £7.49 per hour. Sunita must expect to earn at least £119.84 per week for the 3 months following the date of her declaration of eligibility. Therefore, in the 3-month period following her declaration of eligibility, Sunita must expect to earn a total of at least £1557.92 to satisfy the minimum income requirement as an employed and self-employed person.

£7.49 x 16 = £119.84 x 52 = £6231,68 / 12 = £519.31 x 3 = £1557.92

Sunita can also choose to rely solely on her total annual income from self-employment if she expects it to be equal or greater than the relevant threshold. If she decides to rely on this provision, her income from employment will be disregarded.