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Acknowledgement Liz Hodgman

 

As an Accountant I have worked for many years in Practice producing Self–Assessment Tax Returns. Like many mums with young children, they complained about my working hours and I made the decision to become a childminder so I could be at home with them. .  Whilst attending the necessary Childminding courses I realised that many childminders were concerned about the record keeping and production of their Tax Returns.  I now use  my Tax experience to  help other childminders. They benefit from having their Tax Returns produced by someone who understands them and can make them feel comfortable.

 

My rates are £25.00 per hour and with organised, accurate records in place, the average time taken to produce the Return should be approximately 2 hours.

PREPARING YOUR TAX RETURN                                                         Advertisement

Christine Harris

Tax Returns For Childminders

What are Allowable Expenses?
There is a special agreement between NCMA and H M Revenue and Customs which sets out what Childminders may claim as allowable expenses:

www.hmrc.gov.uk/
manuals/bimmanual/BIM52751.htm

When is my tax return due?
Tax returns are usually issued in April and must be returned by 31st January in the following year together with any liability for tax and National Insurance.

As a newly registered childminder how do I register myself as being Self Employed?
You need to register to pay tax and class 2 National Insurance contributions.

Call the HMRC Newly Self Employed Helpline within 3 months of starting work otherwise you could be fined.
Call 08459 154 515.

What records do I need to keep?
You need to keep a record of fees and any other income you receive such as contributions towards outings and food

You need to keep receipts for items purchased for use in your business. You should also keep household bills.

As a self employed childminder you are responsible for preparing your annual Tax Return

On this page Christine Harris gives some tips and advice about good record keeping and tells us about the service she provides. Christine is a registered childminder as well as an accountant.

 

Childminding Profits

The process of keeping records and completing your own Tax Return is known as Self-Assessment. This system makes keeping records a legal requirement. Records must support the figures that you enter on your Tax Return and must contain details of all the money you receive and spend in the course of your work.

If your income less expenses is lower than your personal allowance (currently £5035), then you may not be required to produce a Tax Return for that year.  You must still  keep financial records for Tax purposes.  If your profit is greater than your Personal Allowances you should request a Return from your local HM Revenue and Customs (HMRC). If you have been issued with a Tax Return it must be completed.

Don’t be late

If you are required to complete a Tax Return it must be submitted to HRMC by 31 January. After that date you will be charged a penalty of £100 and interest daily on any tax you owe. You will be in possession of all the information required for your Return by the middle of April each year. Aim to get this to your Accountant by the end of April and you will have the added advantages that should s/he need to contact you for more information it will still be fresh in your mind. Even if you submit your Return early, any Tax due will NOT be sent with the Return, it does not have to be paid until the 31 January.

 

Write it Down

The HMRC website provides details of the expenses you can deduct from your childminding income, should you wish to produce your own Tax Return without the help of an Accountant. If you are in any doubt whether a particular item of expenditure is allowable or not, simply write the details in your cash book  
(or use an excel spreadsheet)

Then file the receipts in date order. If you find it easier, staple the receipts onto an A4 sized paper and file in your Childminding folder. The more columns of expenditure you have the easier and quicker it will be to produce your accounts. If the item is not allowable your accountant will exclude it from your Accounts, however if you do not write it down you could be missing out on deductible expenses and therefore paying more Tax than you should.

 

Keep all receipts

Record all expenditure and file receipts in date order. If recording the expenditure falls behind your accountant may be able to write up your records if you have kept ALL receipts. Remember, the more work you do recording your income and expenditure accurately, the less work your accountant will need to  do to prepare your Return and THAT MEANS YOU PAY LESS.

 

Household Expenditure

As a Childminder you can claim a % of your Gas, Electricity, Water Rates, Telephone and Council Tax as deductible expenses. Your spreadsheet/cash book should therefore include all household bills paid in the Tax Year or the monthly Direct Debits for these utilities.  You may find your cash book becomes a useful tool to manage your home finances, set a monthly budget for your family and enable you to work out a savings plan for holidays or special purchases.

 

Car Expenses can be calculated in one of two ways accepted by HRMC. Your accountant  will be able to calculate which method is more beneficial to you. To do this s/he would require your cash book to include all car expenses i.e. insurance, Road Tax, Servicing, Repairs, AA membership, Lease Costs and, of course, fuel. They would also require your total mileage for the year and your mileage for childminding related journeys.

ON LINE TAX RETURNS

 

HMRC have produced a podcast video to help explain how to complete your tax return online.

 

Full details and a link to HMRC

CLICK HERE

 

Or for help with your self assessment visit
www.hmrc.gov.uk/sa