Help - very confused!

[annaross82]

Hi everyone, I am Anna and am currently waiting very patiently for Ofsted to send through my registration certificate so I can start childminding.
Been reading through some of the posts on here and have been getting myself confused (doesn't take much) about tax, NI etc and wondered if you could help with a couple of questions I have.

As I have a couple of children myself (both under 5) I am only planning on looking after 1 other child for 3 days a week (to start with anyway). As you can probably appreciate, my income is going to be relatively low and therefore could you help me understand the following:

1. I can see from the HMRC website that current tax allowance for the year is £7,475. Does this mean that if I earn under this I do not have to pay tax? Or will I still have to pay tax at the rate of 20%? I believe that my annual income will be less than £4,000.

2. With regards to expenses etc I am obviously not wanting to run my business at a loss but I am not looking at putting lots of claims through. The parent of the child I have been asked to mind will be providing nappies, wipes, food etc so I am not going to have any expenditure there and I am not too bothered about working out what percentage of my electricity bill I can write off on expenses. I would like my business to be very black and white and therefore only really want to have to declare my income. Am I mad to be doing this? lol!

3. How soon do I have to start making NI contributions?

Any help would be greatly appreciated!

Thank you!
Anna x

[aly]

1. I can see from the HMRC website that current tax allowance for the year is £7,475. Does this mean that if I earn under this I do not have to pay tax? Or will I still have to pay tax at the rate of 20%? I believe that my annual income will be less than £4,000.

this years tax return to pay 31st jan is for the tax year april 2010-april2011...if you are just starting out you wont have to do you tax return until october 2012 if doing the paper version of jan 31st 2013 if doign it online.

2. With regards to expenses etc I am obviously not wanting to run my business at a loss but I am not looking at putting lots of claims through. The parent of the child I have been asked to mind will be providing nappies, wipes, food etc so I am not going to have any expenditure there and I am not too bothered about working out what percentage of my electricity bill I can write off on expenses. I would like my business to be very black and white and therefore only really want to have to declare my income. Am I mad to be doing this? lol!

not at the beginning as you wont likely be earning enough to pay tax etc, but once you are working fully it is worth it..honestly

3. How soon do I have to start making NI contributions?

You can apply for NI excemption certificate...as long as you earn below the amount (im not sure of the correct amount at the mo but someone will say} so you wont need to pay, but you may want to pay if you want the benefits such as maternity pay etc.

[EmmaReed84]

I only started in August 2011 so have yet to do a self assessment... first one will be next year (yikes!)

I would start running you business how you mean to go on, you can then make tweaks as needed, when or if you get busier your systems and accounting are in place and you are not having to come up with a new system, add things, not understand what you can/cannot add etc

[MrAnchovy]

As you will be earning less than the personal allowance you will not pay tax. As a self-employed person you also have to pay Class 4 National Insurance, but there is a lower limit for this two, which is £7,225 this year so you won't have to pay that either :)

If you are earning less than the threshold there isn't much point claiming expenses, unless you are actually making a loss in which case you can carry that loss forward to reduce profits next year.

You should start paying Class 2 NI contributions as soon as you start childminding; if your earnings are less than £5,315 a year you can claim exemption but read this first (http://www.mranchovy.com/information/class-2-national-insurance-small-earnings-exemption).