Mortgage

[Michelle M]

I know you can claim a percentage for rent but can we claim any for mortgages? X

[moggy]

No, you can not claim anything for a mortgage, unfortunately!

[winstonian]

I disagree - last year Mr A said we can charge a percentage of the interest for the time our own children/families arent in the house

[2kidsunder5]

I disagree - last year Mr A said we can charge a percentage of the interest for the time our own children/families arent in the house

Who's Mr A?

[JCrakers]

Really? I'd be interested as Ive never claimed any

From what Ive read I think its a bit complicated if you do claim your mortgage, something to do with Capital Allowance or somethinig so I steered away...too confusing

[rickysmiths]

I disagree - last year Mr A said we can charge a percentage of the interest for the time our own children/families arent in the house

No that is not quite how it works unfortunately. You can claim a % of the interest of your Mortgage. However you have to work out the % of the room/s that you use for cm out of 24 hours. Then you have to work out what % of the mortgage interest that might be and it would vary according to the hours you have minded children with you (not the contracted hours) so actual use and it would change if for example one day you find you have no children then you can't claim for that day.

Then if you can work out the complicated calculation you then need to bear in mind that when you come to sell your house even if you no longer childmind you have to declare the % you have used for tax purposes ans then a calculation will be done to assess the gain you have made. You will then be charged Capital Gains Tax on the % profit you make selling your house.

Do you still want to do it???? If you do, I would seriously recommend you consult a good tax accountant to help you.

Mr A is Mr Anchovy who s an accountant who kindly posts on here to help us.

[MrAnchovy]

It IS complicated, although you don't have to worry about capital gains tax (unless there is any part of your house which you only use for childminding).

Firstly you can only claim if you are using part of the house part of the time ONLY for childminding. If you are looking after your own children in that part of the house at the same time you cannot claim, although if you have older kids upstairs doing their homework or whatever that is OK.

You then have to look at each room in the house - ignoring toilets, hallways, kitchens unless they are big rooms you mind in etc.

You work out what percentage of the house each room represents. This doesn't have to be exact, but it does have to be a fair approximation. So if you have 3 bedrooms, a kitchen with a conservatory that you use as a play room that together counts as 1.5 rooms and a living room you have 5.5 rooms in total, the bedrooms count as 100%/5.5 = 18% each and the kitchen/playroom as 28%.

You then look at each room and work out how much you use it for your business and how much for your family life. So for your spare bedroom that is used for naps for 2 hours 5 days a week (so 10 hours a week) and used by your daughter at uni when she comes home for holidays (10 hours a day for 14 weeks, average over the year is 13 hours a week), it is used 10/23 = 43% for business. As the room is 18% of the house, that is 43%x18% = 7.7% of your total household costs you can claim just for that room.

Note that once you have done that calculation you can claim all your household costs - rates, water rates, insurance (buildings as well as contents), repairs, electrical and plumbing repairs and maintenance etc as well as mortgage interest - using the same calculation, instead of the 10% that is allowed by the concession only for council tax, water rates and rent.

I told you it was complicated, you really need to go through the calculation with an accountant who has experience in these things. Oh and finally you need to put enough detail in the "other information" box on your tax return for HMRC to see what you have done otherwise they can come back 5 years later and challenge it.

[Chatterbox Childcare]

I took Mr A's advice and this year took mine to an accountant and had an additional £7000 allowance to claim against my expenses which in itself paid my accountants invoice

[zippy]

Jusy trying to follow this to do my own calculation, got stuck at this bit


You then look at each room and work out how much you use it for your business and how much for your family life. So for your spare bedroom that is used for naps for 2 hours 5 days a week (so 10 hours a week) and used by your daughter at uni when she comes home for holidays (10 hours a day for 14 weeks, average over the year is 13 hours a week), it is used 10/23 = 43% for business. As the room is 18% of the house, that is 43%x18% = 7.7% of your total household costs you can claim just for that room.

[zippy]

Is the 10/23 bit suppose to say 10/13 had there been a typo or am I totally misunderstanding it all.

[MrAnchovy]

10/23 is correct.

That is the 10 hours per week used for business divided by the average total of 23 hours per week used (10 hours for business plus 13 hours for private use).

But I really don't recommend you do this alone, if HMRC ever challenge it you are going to find defending what you have done very difficult without the background knowledge. Accountants spend years training in boring stuff like this, and spend dozens of hours each year keeping up to date with the latest changes in law and practice.

[k1rstie]

for example

took mine to an accountant and had an additional £7000 allowance to claim against my expenses

(just taking this quote as an example)

Mr A, I know the accountants have all the training and all that. I really do not want to offend you. But really???????? Sound more like magicians to me ! How can they find so much to claim for, and why do the NCMA people who write the accounts books not know about it?


My MP was one of the first to be exposed as a bit dodgy! Hearing about friends who never pay any tax, I wonder how it is done?

[zippy]

Thankyou Mr A, don't worry wouldn't dream of doing it myself just wanted to do a couple of calculations to see if it was worth my while employing an accountant, which I think it might well be. Would you be able to pm me some costs for what you would charge for this service please.

[mum24]

It IS complicated, although you don't have to worry about capital gains tax (unless there is any part of your house which you only use for childminding).

Firstly you can only claim if you are using part of the house part of the time ONLY for childminding. If you are looking after your own children in that part of the house at the same time you cannot claim, although if you have older kids upstairs doing their homework or whatever that is OK.

You then have to look at each room in the house - ignoring toilets, hallways, kitchens unless they are big rooms you mind in etc.

You work out what percentage of the house each room represents. This doesn't have to be exact, but it does have to be a fair approximation. So if you have 3 bedrooms, a kitchen with a conservatory that you use as a play room that together counts as 1.5 rooms and a living room you have 5.5 rooms in total, the bedrooms count as 100%/5.5 = 18% each and the kitchen/playroom as 28%.

You then look at each room and work out how much you use it for your business and how much for your family life. So for your spare bedroom that is used for naps for 2 hours 5 days a week (so 10 hours a week) and used by your daughter at uni when she comes home for holidays (10 hours a day for 14 weeks, average over the year is 13 hours a week), it is used 10/23 = 43% for business. As the room is 18% of the house, that is 43%x18% = 7.7% of your total household costs you can claim just for that room.

Note that once you have done that calculation you can claim all your household costs - rates, water rates, insurance (buildings as well as contents), repairs, electrical and plumbing repairs and maintenance etc as well as mortgage interest - using the same calculation, instead of the 10% that is allowed by the concession only for council tax, water rates and rent.

I told you it was complicated, you really need to go through the calculation with an accountant who has experience in these things. Oh and finally you need to put enough detail in the "other information" box on your tax return for HMRC to see what you have done otherwise they can come back 5 years later and challenge it.

I never heard of this before. None of my children live at home, so during the day all my downstairs is used for childminding. Looking at your calculations, it would benefit me greatly to use this rather than just the standard 10%. Would an 'ordinary' accountant be aware of this for a childminder or should I try to find one who specialises? Also can this be back dated?

[Chatterbox Childcare]

for example

(just taking this quote as an example)

Mr A, I know the accountants have all the training and all that. I really do not want to offend you. But really???????? Sound more like magicians to me ! How can they find so much to claim for, and why do the NCMA people who write the accounts books not know about it?


My MP was one of the first to be exposed as a bit dodgy! Hearing about friends who never pay any tax, I wonder how it is done?

Note that this isn't the tax that I saved but the expense

[Chatterbox Childcare]

for example

(just taking this quote as an example)

Mr A, I know the accountants have all the training and all that. I really do not want to offend you. But really???????? Sound more like magicians to me ! How can they find so much to claim for, and why do the NCMA people who write the accounts books not know about it?


My MP was one of the first to be exposed as a bit dodgy! Hearing about friends who never pay any tax, I wonder how it is done?

Sorry should have also said that they find it because they are trained to do so.. I have been doing my own accounts for over 15 years and now wonder how much I lost out on because of that

[MrAnchovy]

Would an 'ordinary' accountant be aware of this for a childminder

Yes - anyone who uses part of their home for their business can claim using these principles so any accountant that keeps herself properly up to date should be familiar with this.

Also can this be back dated?

If you submitted it on line you can adjust your claim for 2010/11 simply by resubmitting it before 31 Jan 2013. For earlier years you have to write and explain, you have until 5 April 2013 to claim for 2008/9.

[leopardlady]

It IS complicated, although you don't have to worry about capital gains tax (unless there is any part of your house which you only use for childminding).

Firstly you can only claim if you are using part of the house part of the time ONLY for childminding. If you are looking after your own children in that part of the house at the same time you cannot claim, although if you have older kids upstairs doing their homework or whatever that is OK.

You then have to look at each room in the house - ignoring toilets, hallways, kitchens unless they are big rooms you mind in etc.

You work out what percentage of the house each room represents. This doesn't have to be exact, but it does have to be a fair approximation. So if you have 3 bedrooms, a kitchen with a conservatory that you use as a play room that together counts as 1.5 rooms and a living room you have 5.5 rooms in total, the bedrooms count as 100%/5.5 = 18% each and the kitchen/playroom as 28%.

You then look at each room and work out how much you use it for your business and how much for your family life. So for your spare bedroom that is used for naps for 2 hours 5 days a week (so 10 hours a week) and used by your daughter at uni when she comes home for holidays (10 hours a day for 14 weeks, average over the year is 13 hours a week), it is used 10/23 = 43% for business. As the room is 18% of the house, that is 43%x18% = 7.7% of your total household costs you can claim just for that room.

Note that once you have done that calculation you can claim all your household costs - rates, water rates, insurance (buildings as well as contents), repairs, electrical and plumbing repairs and maintenance etc as well as mortgage interest - using the same calculation, instead of the 10% that is allowed by the concession only for council tax, water rates and rent.

I told you it was complicated, you really need to go through the calculation with an accountant who has experience in these things. Oh and finally you need to put enough detail in the "other information" box on your tax return for HMRC to see what you have done otherwise they can come back 5 years later and challenge it.

I have just read this with interest as *****mind in a bungalow and the rooms used for childminding are more than 50% of the area of the property, ie. living room and large kitchen. I have no children living at home and mind for 60 hours a week. It would appear that I would be better off using these calculations but still not clear about the capital gains implications. Would this affect me in my situation please?

[leopardlady]

Obviously I would use an accountant were I to use this method, but on a very general calculation the area used is min. 50%, 52.75hrs business use, 42.5 personal use, (124.12%) which equates to 62.06% claimable? Have I made a big error here?

[MrAnchovy]

I have just read this with interest as *****mind in a bungalow and the rooms used for childminding are more than 50% of the area of the property, ie. living room and large kitchen. I have no children living at home and mind for 60 hours a week. It would appear that I would be better off using these calculations but still not clear about the capital gains implications. Would this affect me in my situation please?

As you presumably use your living room and kitchen for their normal domestic purpose when you are not childminding they remain eligible for Private Residence Relief i.e. there are no Capital Gains Tax implications.

Obviously I would use an accountant were I to use this method, but on a very general calculation the area used is min. 50%, 52.75hrs business use, 42.5 personal use, (124.12%) which equates to 62.06% claimable? Have I made a big error here?

You have the right principles, you just need to hone down the figures: if you mind for 60 hours a week why are you only putting 52.75 hours business use? Is this to take account of the school run? If so, have you only deducted school run hours during term time? Have you added on time for paperwork - you are probably only using the living room at this time, so a lesser percentage, but it all helps. 42.5 hours private use could be about right - 5.5 hours a day in the week (15 minutes for breakfast in the morning, 6.30-10.45 in the evening makes 4.5 hours a day, 22.5 hours a week plus 10 hours a day on weekends - bear in mind that some weekends you may go away Friday night - Sunday night so very little use, but if you stay in all day it could be 16 hours.

In the situation you describe I am not at all surprised you end up around 60% - and this makes a huge difference in the amount you can claim of course, not just on the mortgage interest, service charge, insurance etc. but also those bills you could only cliam 33% or 10% of using the concession.

Sorry I've been a bit slow replying, I'm busy getting a project together ...