Early years providers registered as self-employed or sole traders, including childminders, who receive Universal Credit could miss out on payments as a result of receiving funding for providing 15- or 30-hour childcare.
Under current rules, the Department for Work and Pensions does not make a distinction between income from parent fees, spread across the year, and larger funding payments, which may be made on a termly basis, when assessing eligibility for Universal Credit payments.
The issue was first brought to the Alliance’s attention by the owner of a pre-school in Hampshire.
William Towgood, the owner of Bishopstoke Pre-school in Eastleigh, receives government funding three times a year.
As he was then registered as a sole trader, in each month he received a payment for funded places, he would lose Universal Credit for that month.
He has now registered his pre-school as a limited company, meaning that he is now treated as an employee, and so funding income is treated as separate business income.
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