Just to spoke to HMRC about Tax and NI...

[annaross]

Just had a conversation where I asked about Tax and NI contributions and registering as Self Employed. I was asked if I had already registered with the NCMA to which I replied yes and was told that I am already classed as Self Employed and therefore have to start making NI contributions - despite the fact that I am not taking on my first full time child and running as a business until the beginning of March - does that sound right?

I was quite surprised as I was wanting to get up and running with the NCMA so I could have all of my contracts,policies etc through and in place before I started Childminding.

x

[snufflepuff]

Never heard of this before. I'm not with NCMA but as far as I'm aware they don't inform HMRC that you are self-employed, you have to do that yourself, so being an NCMA member makes no difference. Also, I don't think you have to pay NI contributions until you are earning a certain amount, you can apply for a certificate to show that you don't need to pay I think?

[annaross]

That is what I thought - why would it make a difference if I was a member of NCMA or not? It isn't like they are paying me.

I was told that I would have to make NI contributions of £2.50 a week as this is the statutory Class 2 NI but I may have to pay Class 4 NI depending on my earnings.

All so confusing!

[AgentTink]

On our local course we had a man from the tax office who said the same, as soon as you are setting up that you should norm the tax office, not sure of the full reasons why.

Class 2 NI contributions which is what you pay at the present time (as class 4 is worked out based on what you earn when you do your tax return) is about £2.20 a week.

[annaross]

Is there a big difference between class 2 and 4 NI?

[christine e]

Are you sure they said NCMA and not HMRC? Being a member of NCMA does not mean you have to start paying income tax and ni but registering with HMRC (Her Majesty's Revenue and Customs) means you could be liable but only if you are earning. I would ring them back and ask your questions again

Cx

[AgentTink]

Yes class 4 is calculated as 8% of your earnings after your expenses have been deducted and above the threshold. Ie you earn 15000 minus 5000 expenses. You then deducted your threshold which last tax year was about 7000, which would leave you 3000 of which 8% of this would be ni class 4, so roughly £240.

[annaross]

Ok, I as I am only taking on one full timer as I have 2 of my own children I am only expecting to make 7k a year so hopefully I will be on the lower bands for most things.

[ajc]

As far as I am aware the class 4 NIC is 8% of your net profit before the allowance is taken off, could be wrong but I think this is correct.

[MrAnchovy]

The date when you have to start paying Class 2 NI is a bit of a grey area. Strictly speaking, it is the day you start trading, and if you have joined NCMA then you can be said to have started trading. But most people register from the day they start earning income, and I have never known HMRC to object to a childminder or anyone else providing services doing this (it would be different if you were buying stock to set up a shop, then you would definately be trading before you first earned income).

[maluvsya89]

oooo im worried now, i did my insurance on 10/11/2011 because i had a grant from the council and was told i had to spend it asap blah blah blah and i aint got no children as didnt get registered till 2/12/2011, i still havent got any children so i havent rang them yet as i was told my other child minders to ring them and tell them your start date ahhh. will i get into trouble?? xx

[sarah707]

Hehe well I'm not a member of NCMA so maybe I should de-register from tax and NI then :rolleyes:

How silly. The requirement is that you register as soon as you start earning money from childminding.

So as soon as you earn a penny from self employment - a start up grant, some babysitting, your first childminded child etc - you must ring them and tell them.

Hth :D

[Playmate]

Hehe well I'm not a member of NCMA so maybe I should de-register from tax and NI then :rolleyes:
How silly. The requirement is that you register as soon as you start earning money from childminding.

So as soon as you earn a penny from self employment - a start up grant, some babysitting, your first childminded child etc - you must ring them and tell them.

Hth :D

Don't kid yourself sarah, you don't get out of it that easy :laughing: