Being a bit thick here

[chriss]

But how do expenses work? If I am earning under the taxable amount, I dont know what that is to be honest, then how do I benefit from claiming expenses ? And as I will be co minding, will the money I save on tax cover extra bills ? Such a worry !!

[Kiddleywinks]

The tax allowance per person aged over 21 for the current year is £8150

Your turnover is all the income you receive from minding
From this amount you deduct your expenses
What is left is your profit, and this is what you are taxed on

If your profit is less than the taxable amount then you will have no tax to pay for that financial year
If your profit is more than the taxable amount, then you will pay tax on every pound above that amount

so, say for example:
Year income 2012 - 2013 is £15,000
Expenses/costs are £5,000

Profit is £10, 000
Tax free allowance is £8,150

So you would be taxed on £1,850


If however the figures are:
Year income 2012 - 2013 is £15,000
Expenses/costs are £10,000

Profit is now £5,000
As you haven't earned the tax free amount, you would have no tax to pay


I don't co mind, but I was in a partnership many moons ago in a different type of business and it worked very similar in that the business turnover, less the expenses gave the profit for the business, which was then divided between us to give our individual profit, and if that amount was above that years threshold we each paid tax on our respective portion.

[chriss]

The problem with co-minding is will my claiming expenses for heating/lighting etc cover those bills, or is there another way to deal with this ?

[Pixie dust]

The problem with co-minding is will my claiming expenses for heating/lighting etc cover those bills, or is there another way to deal with this ?

You will only be able to claim a percentage dpending how many hours you work a week. As you are co minding at the other persons house? I am guessing you will be sharing the expenses. Have you got to pay the other person an amount towards the heating etc?I am not quite sure how it works when you co-mind but I am sure someone who does will be along to help.

You know that you don't actually get your expenses back?

[Kiddleywinks]

The problem with co-minding is will my claiming expenses for heating/lighting etc cover those bills, or is there another way to deal with this ?

In what way do you mean cover those bills?
As Pixie's pointed out, only a proportion of the minders household bills can be claimed and that amount depends on the hours actually worked.

I think it would depend on how you've set up the minding as to how the household bill amounts be sorted.
Are you putting your finances together, deducting costs, and then splitting the profits between you? Or are you both responsible for your own finances?

[chriss]

The plan is to share the income equally, and I claim the expenses for tax purposes as it is in my house. But as my bills will go up, quite a bit I expect, I dont know what is fair. Should we somehow work out the energy bills for the hours worked and each pay our share ? How do other co-minders work this out ?

[Pixie dust]

The plan is to share the income equally, and I claim the expenses for tax purposes as it is in my house. But as my bills will go up, quite a bit I expect, I dont know what is fair. Should we somehow work out the energy bills for the hours worked and each pay our share ? How do other co-minders work this out ?

If you are sharing the income equally then you surely should be splitting everything 50/50. It doesn't sound fair to me as you have all the bills, It's not just the energy bills, you need to think about all the expenses related to childminding food/drink/insurance. Are you supplying all the equipment/ resources?

[chriss]

we have contributed equally to all the resources so no problems about that. Its just really how to manage the finances, so that it is fair to us both.

[Kiddleywinks]

Personally, if it was my home being used, I would log all the income received, deduct all the expenses - bills percentages based on hours worked, further resources, 10% wear and tear, insurances, food, nappies etc then divide the profit 50/50 with the other minder.

You would need to stay on top of the accounts every month - don't let things slide, which is easily done :laughing:, so that you receive the household portion every month in addition to your 50% share.


Here is a link to the HMRC website showing the percentages allowed (Thanks to Rickysmiths posted on another thread :thumbsup:)
Care providers: Childminders: expenses (http://www.hmrc.gov.uk/manuals/bimmanual/bim52751.htm)

[k1rstie]

sounds very tricky to me!! Letss hope you are great friends.

You cannot do a straight split at the end of the month. Your friend walks out of your house with 50%, you will have wear and tear on your house, plus other costs too.

You need some detailed help from someone who does co-mind. Pros and cons? I can not really think of any pro's, when it is in your house.
Look back at past threads - recently for one minder the co-minding has not gone well

[MrAnchovy]

There is another thread running about the very same thing.

I would advise you to get an accountant to ensure that you are claiming the right amount of expenses between you - get this wrong and you could be throwing money away or claiming more than you should do and risking a big bill for underpaid tax if you are selected for an inquiry.