With just a few weeks before the school term ends for the summer, working parents, some of them doing job-sharing or part-time work themselves, are busy making final arrangements to keep their children safe and occupied for the long summer break. Ideally, part-time childminders take over full-time in the summer, but this isn't always possible. Instead, most working parents resort to taking the bulk of their own holidays in July and August and then using a combination of neighbourhood babysitters, summer camps, Irish college, grannies and other relatives to supervise their children's long days.
Even if you are very organised, the cost of keeping your children cared for part-time or full-time between the end of June and the beginning of September can make serious inroads into the family budget, especially if you haven't had to resort to paid help during the school year. Ms C works full-time and employs an au pair and a creche to mind her three children. (The toddler goes to the creche, the two older ones are picked up from school by the au pair.) For this she pays a total of £105 a week. Flexi-time means she is back home by 3.30 p.m. every day but the au pair is too young to be left with the two older children all day and so, she has booked them into three separate summer school day camps (one of them is the popular Dublin Zoo camp) for three weeks in July at a cost of between £40 and £50 a week each. The total cost is £270.00. She and her husband will both be on holidays for three weeks in August they will take one week at a cottage in Mayo and other family members are going to mind the children for the two separate weeks in July and August when they are not in camp. But the extra cost of the camps has resulted in her childminding costs soaring to £690 in July.
For many working mothers, the only realistic, if expensive solution, is to hire a full-time minder to either come to the house every day or to live in. Childminding agencies say they can barely meet the demand for trained, professional nannies who cost in the region of £150£180 per week (usually net of tax) and slightly less if they live-in because room and board are included .
"Fewer and fewer girls are interested in living in," says Mr Niall Watson of ChildMinders Ltd in Dublin, one of the longest established agencies. "Many have their own places and want their privacy." Others believe that if they live-in the employer will take advantage of their continuous presence, he says.
The tax status of childminders is an issue that continues to vex and annoy both the employer and childminder. Most full-time minders and nannies will assume that you are quoting a net salary when a position is offered and employers need to make the tax position clear from the start, and perhaps adjust expectations downwards. And while many married women who already have children and are minding other people's as well are especially reluctant to get into the tax net, because of the impact their earnings might have on their husband`s overall tax allowances, "more and more girls who have taken the courses and have their diplomas" want to regularise their tax position, says Mr Watson.
His company's advice to both parties is to register for tax. "But it doesn't always happen," he says, mainly because of the lack of tax relief for the employer and the overall low wages. "We've argued for years that giving parents tax relief for their childminders would create thousands more legitimate jobs in this industry. At the moment we can't meet the demand."
Changes in the income-tax regime mean that the tax that low-paid workers like childminders are liable for is not as onerous as it once was: the basic tax-free allowance for a single person is £3,150 and the PRSI allowance is £800. The next £10,000 you earn is subject to income tax of 24 per cent.
If you earn less than £10,750 a year you only pay PRSI at 4.5 per cent because you do not have to pay the 2.25 per cent worth of levies. From April 6th this year, if you are not paying the full rate of PRSI, you get a weekly exemption from PRSI on the first £20 earned.
A lot of these changes were introduced in an effort to encourage people out of the black economy and into the legitimate one both in order for the State to benefit from the added revenue, but also for the worker to be able to claim benefits if they fall ill, lose their job or have a baby themselves and want to claim maternity leave. The PRSI charges for employers have also been reduced: if you hire a childminder and pay them £30 or less a week, the employer PRSI has been cut to just 0.5 per cent; over that amount it jumps to a hefty 8.5 per cent but still less than the highest rate of 12 per cent.
A childminder who earns £7,800 gross a year (ie. £150 p/w) will pay approximately £126 annually in PRSI and £924 in income tax. Her employer will pay 8.5 per cent PRSI or £351a year. In all, someone earning a gross weekly wage of £150 will take home approximately £130 after deductions and the total cost to the employer will be £8,151. Given that this wage must be found out of tax-paid income to begin with, it isn't too surprising that many working parents still prefer to avoid having to pay the additional employer's PRSI contribution and fail to register as employers. this applies only if you pay less than £30 a week. If you pay over £30, you still have just a single page to fill out and the PRSI return only needs to be sent in once a year. In Britain, where PRSI payments have to be made quarterly, the Inland Revenue has set up employer telephone helplines, sent out tax starter packs and have devised, like here, a Simplified Deduction Scheme. Nevertheless, the demand for tax help is so great that a number of dedicated payroll service companies exist to help people who employ nannies and other domestic staff. For about £120 plus VAT, these companies will send out weekly pay slips, send notice of when the quarter National Insurance contributions are due, prepare P60s and P45s if the nanny leaves. Both sides appreciate that the tax procedures are being handled properly. (Here your local Revenue Office will assist with any of these procedures or you can hire an accountant.)
There are strong arguments in favour of regularising the tax situation of any part- or full-time childminder, says one tax accountant we consulted. PRSI contributions mean that the employee is eventually entitled to a range of benefits, from eye tests to a pension someday and that you are protected from tax blackmail: a vindictive employee who complains to the Revenue that she thought her stamps (and tax) were being deducted at source, when they were not, will not be the one to have to foot any back tax bill. That unpleasant task will be left for the employer.
