Lots of advice please!!

[SLJ100]

I am looking at registering with my husband for childminding and doing it as a joint business. But struggling to understand the tax implications. Would we be a partnership? Would we both complete self assessments? What would our tax implications be?

Any advice would be greatly appreciated please.

thanks for reading this post.........

[Chatterbox Childcare]

I registered my DH last year and we now complete 3 returns:

Register as a partnership and then do a Partnership Return - do this by the end of July in paper form or you have to pay for software to lodge online after that

you both register as self employed and do a self assessment each

Watch the VAT level as you may hit that being a partnership

[MrAnchovy]

Register as a partnership and then do a Partnership Return - do this by the end of July in paper form or you have to pay for software to lodge online after that

Watch the VAT level as you may hit that being a partnership

Childminding is exempt from VAT so you never need to charge it, but if you go over the VAT threshold (currently £77,000) there are some additional reporting requirements.

You have until 31 October to file a paper partnership return.

The main benefit is that because your profits are split between you, you can earn twice as much before you start paying Income Tax and Class 4 NI.

[Chatterbox Childcare]

Childminding is exempt from VAT so you never need to charge it, but if you go over the VAT threshold (currently £77,000) there are some additional reporting requirements.

You have until 31 October to file a paper partnership return.

The main benefit is that because your profits are split between you, you can earn twice as much before you start paying Income Tax and Class 4 NI.

can you give me a link to the additional reporting requirements please and I thought this year was £84,000 or is that for next year?

[MrAnchovy]

can you give me a link to the additional reporting requirements please and I thought this year was £84,000 or is that for next year?

£77,000 is from 1 April 2012 (it was £73,000 last year), the figure for 2013 has not been announced but it has gone up in line with inflation for a few years now. The only £84,000 threshold I can find is the Pension Scheme Earnings Cap for 97/98???

From the guidance for the 2011/12 partnership return (http://www.hmrc.gov.uk/forms/sa850.pdf):
"If the annual turnover was between £73,000 and £15m (or would have been if you had traded for a whole year), you must fill in boxes 3.27 to 3.73 on page 4. You must also fill in page 5 as applicable, any relevant supplementary pages and a Partnership Statement."

Also I can't remember offhand what happens about the 45p per mile allowance for partnerships over the threshold.

[Chatterbox Childcare]

£77,000 is from 1 April 2012 (it was £73,000 last year), the figure for 2013 has not been announced but it has gone up in line with inflation for a few years now. The only £84,000 threshold I can find is the Pension Scheme Earnings Cap for 97/98???

From the guidance for the 2011/12 partnership return (http://www.hmrc.gov.uk/forms/sa850.pdf):
"If the annual turnover was between £73,000 and £15m (or would have been if you had traded for a whole year), you must fill in boxes 3.27 to 3.73 on page 4. You must also fill in page 5 as applicable, any relevant supplementary pages and a Partnership Statement."

Also I can't remember offhand what happens about the 45p per mile allowance for partnerships over the threshold.

Thank you - will put in on the "to read" file :)

[SLJ100]

Thanks for the replies - My internet has been off for a few days so only just read them !

Am I correct in thinking then that if we are a partnership then we can just split the profits 50/50 ? How do you account for your own drawings/wages ?

We need to draw a wage each week so does this come off the gross profits ?

I am thinking this out loud so please bear with me !

If we earn for example 10,000 net profit, we split this between us so would be 5,000 each ?
Just not sure how to account for monies we take out for wages for ourselves ?

[Chatterbox Childcare]

My understanding is that there are no wages just a split in profits. Drawings are a company which we cannot be according to Mr A

You can split the profit any way you like

[allison]

how do you go about registering as a partnership? do you contact hmrc and they do it all? :panic:

[MrAnchovy]

Am I correct in thinking then that if we are a partnership then we can just split the profits 50/50 ?

Yes, or any other way that you want.


How do you account for your own drawings/wages ?

We need to draw a wage each week so does this come off the gross profits ?


No, drawings (which is the correct term for money taken out of a business by partners, they can't receive wages) don't exist as far as calculating your taxable profit is concerned.

[MrAnchovy]

how do you go about registering as a partnership? do you contact hmrc and they do it all? :panic:

Business Link (http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073864308).

[Chatterbox Childcare]

how do you go about registering as a partnership? do you contact hmrc and they do it all? :panic:

I am sure I did it online. Search in the help box on the hmrc website