If you saw my post about being made redundant, then you’ll know that it’s been a tricky time in terms of getting work while balancing childcare responsibilities. Our baby was a year old when I was made redundant. My partner was returning to work after maternity leave, and the plan had been for her to return part time. Suddenly, we needed her to return full time while I looked for a new job.
We assumed we were no longer entitled to the government’s Free Childcare for Working Parents, which provides 30 hours of free childcare per week, if your child is aged 9 months to 4 years old for 38 weeks of the year. This is worth somewhere between £8-£13k per annum depending on where you live. To be eligible, you must among other things both be working. So I set about trying to find work while looking after our baby full time.
After publishing my LinkedIn post, someone reached out to tell me that there appears to be an unpublicised grace period for those in my predicament. It seems that the childcare code is still valid for up to six months after you’re made redundant. That would have been good to know when I signed on for the New Style Job Seekers Allowance – don’t start, I wasn’t keen. Anyway, following that news we applied for free childcare hours and it worked – at that stage I’d been out of work for a couple of months.
I decided last month that while applying for jobs I would also start a new project management consultancy. We read that for those who are newly self employed, there is a 12 month grace period for the childcare scheme while you get the business off the ground. We found out today that this doesn’t apply to my shiny new private limited company as I was technically employed by the company and not self employed! After a call to HMRC, we found bizarrely that the grace period does however apply if you set up as a sole trader, and so I looked into the implications of operating the business as a sole trader as opposed to a limited company. My conclusion was that while a private limited company was preferable (mostly due to the limited liability protection), it would be fine to switch to sole trader status for the time being to take advantage of the childcare scheme.
Today I made the limited company dormant and registered as a sole trader. I’m not sure that HMRC have really thought this all through as I don’t understand the rationale for this discrepancy. Anyhow, the hoop has been jumped through, and I can now get on again with running the business.
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