Confused!

[LizP]

M a pre reg and v confused! I know that I have to;
Keep receipts
Buy accounts book
Complete it regularly to claim for expenses
I know what I can claim for
I know to keep approx 20% of earnings aside for my tax bill (even tho I prob won't earn enough) just to be safe
But what I don't understand is how I claim back on expenses? And why? Because i am self employed? Do I actually get money back or is it simply to reduce my gross income and then I'm taxed less?
I am reading lots but it's not sinking in

[muffins]

Yes it just reduces your income so you get taxed less. You don't pay tax on the amount you have spent on expenses so you don't actually get that back or even reduce your tax bill by the whole amount.

[tulip0803]

M a pre reg and v confused! I know that I have to;
Keep receipts
Buy accounts book
Complete it regularly to claim for expenses
I know what I can claim for
I know to keep approx 20% of earnings aside for my tax bill (even tho I prob won't earn enough) just to be safe
But what I don't understand is how I claim back on expenses? And why? Because i am self employed? Do I actually get money back or is it simply to reduce my gross income and then I'm taxed less?
I am reading lots but it's not sinking in ������

Your expenses are taken off your gross income which reduces your net income and makes your tax liability less. Your expenses are costs that are for your childminding business equipment/cleaning products/food/milk/toys/mileages/% of heating, lighting, council tax, rent & water.

Saving for tax means that if you don't need to use it for tax you will have saved x amount towards something you want:clapping:

Happytoddlers put a great excel accounts workbook on the forum http://www.childmindinghelp.co.uk/forum/book-keeping-accounts-tax-expenses-national-insurance/104599-book-keeping-excel-workbook-updated.html - go towards the ned of the thread to get this years version. It works it out for you:thumbsup:

I use a duplicate receipt book to give parents a receipt. I record income and outgoings onto the workbook along with daily work times and it does all the calculations for me

[LizP]

Thank you! It's v clear now!