Child care concession for the self-employed

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The Independent Online
BARRISTERS have won a tax concession that could help thousands of self-employed people with children.

They have gained the right to deduct up to 10 per cent of their child care costs for tax purposes. Other self-employed parents could benefit from the concession.

If you are self-employed, for an expense to be allowable it must be wholly and exclusively for your business or profession. Child care costs are not an allowable expense for tax purposes. The cost of nannies and childminders has to be met out of taxed income.

The concession that barristers have won is to a certain extent dependent on the peculiar nature of their profession.

A barrister is self-employed but does not have an individual secretary. For many barristers who have children their nanny doubles as a secretary.

The Inland Revenue has now agreed that the secretarial element of the nanny's salary is allowable. The agreement is that 10 per cent of the total cost of employing the nanny, including where appropiate a reasonable estimate of the cost of board and lodging, is a deductible expense subject to a maximum allowance of pounds 1,500 a year.

PAYE must have been applied to the nanny's salary. In other words, if you want the tax concession she must be properly employed and not being paid cash in hand.

The concession is available to male and female barristers alike. But the Inland Revenue will not normally accept a claim for a nanny allowance if a claim is also being made that wages paid to a spouse are a deductible expense.

The concession does not apply to the cost of a child minder as opposed to an in- house nanny.

A spokeswoman for the Association of Women Barristers welcomes the concession: 'Unlike doctors, solicitors and other professionals, barristers do not have their own secretaries. They often have to rely on people at home.'

There is nothing to stop any other self-employed person without a secretary approaching the Inland Revenue in the same way.

Martin Donn, a tax partner with the chartered accountants Blick Rothenberg, says: 'There should be no problem obtaining as a business expense part of the salary costs provided the nanny is carrying out secretarial duties. If justified it may even be possible to claim more than 10 per cent of a nanny's salary.'

(Photograph omitted)

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