What an obvious question!

You pay your childminder, and they mind your child or children. Seems like an open and shut case, right? As far as the dictionary is concerned, you employ them to do a job, so you’re their employer, yes?

Not yes.

HMRC disagrees with the dictionary when it comes to what defines an employer. So rather than looking at what the Oxford professors in charge of defining words say, let’s go and ask the tax man.

Do you employ your childminder?

The Taxman’s answer? Not really…

There’s only one specific circumstance where HMRC would say that you employ your childminder.

You’d have to set up a company with the job of looking after your child, and then hire them. Do you handle their PAYE, and NI, and pension contributions, and statutory sick pay, and give them a wage slip each month and a P60 every April?

Then OK, the tax man will say that yes, you employ your childminder.

If you just pay them their fee to look after your child every day, or every week, or however often they send you a bill.
Then you aren’t an employer. You’re just a customer.

Who does employ my childminder?

Your childminder will either employ themselves as a self-employed person, or they’ll work for a larger childminding agency.

Take a look at the bill. Who’s the company it comes from?
They’re who employ your childminder.

They either have a boss, or they’re their own boss. Either way, as far as employment goes, you aren’t really in the picture. You’re their client, sure, and you pay for their services, of course, but legally you aren’t their employer. Only their customer,

You might feel like you’re slightly less important now, but it’s saved you quite a lot of administration.

And who’s responsible for the tax?

As a customer, you’re off the hook as far as tax goes.

If your childminder works for a childcare agency, then it’s that agency who’s responsible for tax and PAYE and pension contributions and all that stuff you don’t really want to have to think about.

But most childminders are self-employed. And that means they’re responsible for submitting their tax returns on time, keeping track of what they spend and earn doing their job, and on paying the right amount of tax every year.

How can I make sure my childminder is paying the right amount of tax?

You could offer to work for them as an accountant. But then you wouldn’t really be their employee, you’d be self-employed. And you’d be in the same boat as them when it came to tax. So why not do things the simple way?

Tell them to speak to Penny Ledger.

We’ll help them compile and submit their tax returns for just £99 each year – and that’s £99 that counts as tax deductible for them.

They send us all their invoices and receipts, and our fully qualified accountants do the rest. We’ll sort out their tax returns so they don’t overpay, and we’ll make sure it’s all filed on time so they aren’t left dealing with fines from HMRC.

You might not employ your childminder, but they’re looking after your kids. Make sure you’re looking after them by telling them all about Penny Ledger.