Payments from family

[bunyip]

As well as my other minded children, I provide care for my grandchildren for which I receive a small fee. I don't know if I should be putting this through my accounts.

At the moment, it doesn't make any difference tax-wise as I don't reach the income tax threshold with or without it, but I can see how it might become significant as I build up clients.

It might well be significant to my daughter, as she could gain something through her university bursary (and later through tax credits when fully employed) if she can quote my registration number.

Does anyone know the answer? I've had several people suggest what might or might not be the correct way, but nobody seems to know for sure.

[Tina O]

Hi, if you read the tax credit help booklet it gives information claiming tax credits for a relative looking after her children.

http://www.hmrc.gov.uk/leaflets/wtc5.pdf

page 11 has some useful advice; if you are registered and look after your grandchildren (not in their own home) and also look after other chidren then your daughter can claim tax credits. I believe that if you meet this criteria, the 'HMRC' will class you as a registered childcare giver to your grandchildren then your grandchildren would be treated the same as any other mindee children in all finiancial dealings.... does that make sence, I know what I want to say but not sure I'm being clear xx

[cloud9]

All income should go through the accounts regardless of who pays it or if the amount you earn is below the tax threshold.

If you earn below the limit, you simply delcare this on your end of year tax return and your tax and Ni will show that £0.00 is due.

However all income should be recorded and declared otherwise you are not complying with legal requirements of self employment

[karen m]

I look after my grandson as well as other lo and his mum works hence why i have him ,but she claims child tax and it has alwasys gone through my books ,

[bunyip]

Thanks for those helpful replies. My first ever post on the forum, and it's great to know you're so helpful and knowledgeable.

I was confused after to speaking to HMRC. One person there said I must put it through the accounts, the other said not so for a relative.

The Tax Credits Helpline said I should declare it as income, but that my daughter would NOT be able to claim for the childcare element on her tax credits. So it's nice to be able to quote from their own publication to show they were wrong!

I'm happiest putting it through my accounts, as I like things all neat and open. But I'd object to paying tax if my daughter was not allowed to claim the tax credits. Guess I have an innate sense of fair play.