How much to save

[clare83]

Payments from parents £1200
Expenses (food,resourses ect) £200

How much tax should I pay on the remaining £1000 income. Is it 20%?

I was told on my pre reg course that as long as I spent 20% of my payments from parents I would not need to pay tax....is this right?

Really want to invest in resources but unsure.....

How do you budget you accounts?

Many thanks x

[tulip0803]

Is this per month or for the last year??

You have a personal tax allowance of £9,440 for the 2013/14 tax year - only income over that will attract tax at 20%

The personal allowance for 2014/2015 will be £10,000. The personal tax allowance is always tax free.

If that is for the 2013/14 year you will not pay tax unless you have used your tax allowance on another job. If it is per month then 12x £1000 = £12,000 per year. To get how much tax you will pay you will need to take that year's personal allowance off so for next tax year (2014/15) would be £2000 taxable income at 20% = £400 tax to be paid (roughly worked out aas your expenses and income may change over the year). If that is for the last year then it will be a little more as the tax allowance is less

Unfortunately what you were told on your course is incorrect.

I would try to put away at least 10% of income - 20% if possible and then you will have enough money to pay tax in Jan and have some savings too

If you need to buy equipment then you need to buy it - even if it is 2nd hand or saved up for

[clare83]

Is this per month or for the last year?? You have a personal tax allowance of £9,440 for the 2013/14 tax year - only income over that will attract tax at 20% The personal allowance for 2014/2015 will be £10,000. The personal tax allowance is always tax free. If that is for the 2013/14 year you will not pay tax unless you have used your tax allowance on another job. If it is per month then 12x £1000 = £12,000 per year. To get how much tax you will pay you will need to take that year's personal allowance off so for next tax year (2014/15) would be £2000 taxable income at 20% = £400 tax to be paid (roughly worked out aas your expenses and income may change over the year). If that is for the last year then it will be a little more as the tax allowance is less Unfortunately what you were told on your course is incorrect. I would try to put away at least 10% of income - 20% if possible and then you will have enough money to pay tax in Jan and have some savings too If you need to buy equipment then you need to buy it - even if it is 2nd hand or saved up for

Thanks that's really helpful. I hear so many childminders saying they claim for everything possible to bring down how much tax they pay. From what you are saying this wouldn't really affect the %age of tax we have to pay. Have I understood that right?

Yes the £1000 figure is per month.

Feeling annoyed that the pre reg woman had the wrong info. She said at the end of the year if you worked out you had to pay x in tax then they went and purchased something (ie new buggy) and then no tax would be due....have you heard of this?

[rickysmiths]

I put away 30% of my income to cover Tax and NI payments.

[clare83]

I put away 30% of my income to cover Tax and NI payments.

I think I need to start saving more :-0.

[AdeleMarie88]

I invoice weekly, which I find helps me to save more...

I save about 20% every week but I always have a little extra left over on top of that. The 20% goes into an ISA account which has a really high interest rate, it adds up quickly!

I was told by my brother (he is an accountant) that a business of my size should always have £2,000 in the bank, having that figure in mind was great, and after nearly two years I have that money there, just in case anything goes disastrously wrong. (Separate from tax savings) x

[rickysmiths]

Thanks that's really helpful. I hear so many childminders saying they claim for everything possible to bring down how much tax they pay. From what you are saying this wouldn't really affect the %age of tax we have to pay. Have I understood that right?

Yes the £1000 figure is per month.

Feeling annoyed that the pre reg woman had the wrong info. She said at the end of the year if you worked out you had to pay x in tax then they went and purchased something (ie new buggy) and then no tax would be due....have you heard of this?

I have heard people say this but I think it is a silly way to do things. The aim of you working is to earn money and as a result you will have to pay tax at some point. I don't want a house full of equipment and resources I don't really need either.

[tulip0803]

Feeling annoyed that the pre reg woman had the wrong info. She said at the end of the year if you worked out you had to pay x in tax then they went and purchased something (ie new buggy) and then no tax would be due....have you heard of this?

Why would you want to spend £2000 on un-needed resources just to save yourself from paying £400 tax??

If I need equipment I look for the best price (sales/second hand etc) I don't want to spend more than I need to.

Also if the time comes that you need to apply for a mortgage/change your mortgage you need a healthy income

[hectors house]

Thanks that's really helpful. I hear so many childminders saying they claim for everything possible to bring down how much tax they pay. From what you are saying this wouldn't really affect the %age of tax we have to pay. Have I understood that right?

Yes the £1000 figure is per month.

Feeling annoyed that the pre reg woman had the wrong info. She said at the end of the year if you worked out you had to pay x in tax then they went and purchased something (ie new buggy) and then no tax would be due....have you heard of this?

Claiming for everything you can probably just means being really aware of what you do use for childminding - things like toilet rolls, cleaning products, stamps, envelopes, cling film, stationery, washing powder (for washing cot sheets & towels etc) these are all things that you would buy anyway so often people don't realise that you are now using twice as much and could put a percentage through your accounts. It's amazing how all those £1 here and £1 there adds up, especially for things you don't get receipts for like toddler groups, car park charges, ice creams on a day out.

[Kiddleywinks]

Payments from parents £1200 Expenses (food,resourses ect) £200 How much tax should I pay on the remaining £1000 income. Is it 20%? I was told on my pre reg course that as long as I spent 20% of my payments from parents I would not need to pay tax....is this right? Really want to invest in resources but unsure..... How do you budget you accounts? Many thanks x

Parents fees total £1200
From that you can deduct your expenses : 10% wear and tear, % of household bills incl rent - if you pay it, council tax, gas, electric, water, etc, other expenses such as those mentioned above, food, resources, vehicle/mileage, etc
That will give you your profit for that month
From that you can then deduct your taxable allowance (£9440 divided by 12 months = £786.66)

If there's any profit left you will pay 20% tax on that figure so that's the amount you should put aside.
There's also national insurance to think about too but haven't got those figures to hand at the moment.


Are you sure you've deducted ALL your expenses correctly, as £200 is very low. My 'fixed expenses' (wear and tear, household bills etc) alone come to more than that lol

There is an expenses guide in the free resources area you may find useful :thumbs up: