no idea????

[chewy sweets]

If i'm earning £1080 a month does anyone have any idea how much i should be putting by each month the cover tax and National Insurance?
As i'm only starting earning money this week coming and haven't registered as self employed yet!

[Chatterbox Childcare]

I have calculated £1080 x 12 = £12960 and then taken off 40% for expenses = £7776.00, then take off you allowance of £6035 = £1741 profit and divide that by 12 is £145 and then multiply by 25% gives you £36.27 per month to be saved.

I wouldn't worry too much about it.

[Allie]

What a great way to work it out


Allie

[venus89]

Wow!!

I just put £25 per week aside (that's £5 per mindee) and it makes a nice little nest egg for if I need a sudden big outlay as well as covering the tax.

[Blackhorse]

Debbie I like your way of doing it..

when I did the induction course they just said to keep 20-25% of your earnings back each month in case you need to pay tax.
if not you have saved up some money....but of course you are putting way too much away each month with their method...

[venus89]

if not you have saved up some money....but of course you are putting way too much away each month with their method...

That's an awful lot, like you say. Because expenses take away a huge heap of your income so you'd be lucky to earn enough to have to pay that much tax

[chewy sweets]

I have calculated £1080 x 12 = £12960 and then taken off 40% for expenses = £7776.00, then take off you allowance of £6035 = £1741 profit and divide that by 12 is £145 and then multiply by 25% gives you £36.27 per month to be saved.

I wouldn't worry too much about it.

Sorry i'm really thick when it comes to figures! What's the £6035 Allowance??:panic:

[TheBTeam]

The £6035 is the amount you can tax free each year if you have a standard tax code.

[chewy sweets]

The £6035 is the amount you can tax free each year if you have a standard tax code.

Sorry what's a standard tax code????? So sorry to sound so thick!!!:blush:

[miffy]

Everyone is allowed to earn so much money each tax year without paying any income tax.

For 2009/2010 (6/4/09 to 5/4/10) that amount is £6035.

HTH's

Miffy xx

[chewy sweets]

Everyone is allowed to earn so much money each tax year without paying any income tax.

For 2009/2010 (6/4/09 to 5/4/10) that amount is £6035.

HTH's

Miffy xx

:thumbsup: Oh thanks for that! Ijust haven't got a clue with the financial side of things! It's the only thing about the job i dislike! :laughing:

[miffy]

Sorry Katie - got the figures wrong - the amount quoted is for last tax year (08/09) - new rates are here

http://www.hmrc.gov.uk/rates/it.htm

There are lots of things you can offset against your income - Pauline did a good list but I'm not sure where it is.

Miffy xx

[miffy]

Here's a thread with details about expenses you can claim

http://www.childmindinghelp.co.uk/forum/showthread.php?t=28208&highlight=business+expenses

Miffy xx

[Gizmo]

Thats a great way to work it out Debbie:thumbsup: makes it seem quite simple

[manjay]

Not sure if you were still employed and on maternity leave this tax year. If so you will have paid tax on that already but you will need to take those earnings into account too.

I wouldn't stress too much as you have only just started. Any you save will be a bonus but I am into my 3rd year and this will be the first year I am likely to make a profit:rolleyes:

[Lady Haha]

Hi Debbie, if your'e still about! You say in your calculations to take off 40% for expenses. I thought we were allowed up to two thirds of our income as expenses (66%)??

The reason I am asking, is that my income has gone up as I've got busier and I worked out that I will earn about 1200.00 a month on average. I am more than happy to spend 800.00 of that on expenses! Means I can take the kids to great places in hols and buy great stuff for the playroom and garden etc.

I am in an odd position as a single parent. I get housing benefit and that is worked out on my profit, so if my profit gets bigger, I just lose housing benefit! So it works out better for me to spend as much as poss on expenses to keep my profit lower! Also, working tax credits is worked out on my profit, so that would go down too!

[Chatterbox Childcare]

Sorry Katie - got the figures wrong - the amount quoted is for last tax year (08/09) - new rates are here

http://www.hmrc.gov.uk/rates/it.htm

There are lots of things you can offset against your income - Pauline did a good list but I'm not sure where it is.

Miffy xx

My fault Miffy and thanks for pointing it out as I had mine wrong

Looks like you won't pay tax after all.

[Chatterbox Childcare]

Hi Debbie, if your'e still about! You say in your calculations to take off 40% for expenses. I thought we were allowed up to two thirds of our income as expenses (66%)??

The reason I am asking, is that my income has gone up as I've got busier and I worked out that I will earn about 1200.00 a month on average. I am more than happy to spend 800.00 of that on expenses! Means I can take the kids to great places in hols and buy great stuff for the playroom and garden etc.

I am in an odd position as a single parent. I get housing benefit and that is worked out on my profit, so if my profit gets bigger, I just lose housing benefit! So it works out better for me to spend as much as poss on expenses to keep my profit lower! Also, working tax credits is worked out on my profit, so that would go down too!

The more you earn the less percentage of expenses you will have.

If you can write off 66% I would say keep going. As long as you can justify it to the tax man why not. It was just a rough calculation that I use.

[TheBTeam]

You can any amount that you like as expenses, because you have to be able to justify it with receipts, evidence and accounts, the 2/3rds bit is the amount that is used as an automatic disregard for calculating and entitlement to benefits, where they don't worry about your actual expenses, just take 2/3rds off of your gross amount.

For income tax purposes you have to have accounts that you can justify, if you want to spend 90% say of your income and have receipts etc to justify it if the tax man wants to investigate! It would seem from threads on here, that expenses run anywhere around 1/3 to 2/3rds of your income, it will also depend on the size of your income, the less your earn the higher percentage your exp may well be in relation to your income, and it also varies on the trips you make, the amount you spend on activities/food etc.

[TheBTeam]

Sorry what's a standard tax code????? So sorry to sound so thick!!!:blush:

An individuals tax code can be affected by other earnings, underpaid tax from previous years, and a few other things, which raise or lower you tax code, and thus affects the amount that you can earn before paying tax.

[Lady Haha]

Sorry to hijack the thread!

But just wanted to say thanks to Debbie and Bteam! Yes, I can justify two thirds as expenses! I really do spend that much on the little blighters! Well, when you take off electric, gas etc. And I keep all my receipts,even the ones for less than ten pounds, so mr taxman would have a headache by the end of the day if he came to see me!

I'm glad thats sorted, cos I did wonder why on earth I couldn't spend as much as I like on my business! I think I will stick at two thirds though as any more than that might have them investigating and even though I could justify it, it still wouldn't be a pleasant experience!