High expenses

[funfunfun]

I know my exspenses this year will be high as its my first year

I was told 50% is about right for exspenses when childminding

so if you earn 12000 then 6000 is right for exspenses taking into account rent, electric, water , coal , council tax, shoppin , toddler groups , petrol , resources , insurence , i had to but pushchairs , safty gates , highchairs the lot .

[rickysmiths]

I know my exspenses this year will be high as its my first year

I was told 50% is about right for exspenses when childminding

so if you earn 12000 then 6000 is right for exspenses taking into account rent, electric, water , coal , council tax, shoppin , toddler groups , petrol , resources , insurence , i had to but pushchairs , safty gates , highchairs the lot .

I do realise that if you earn less then the fixed expenses like Heat Light Insurance etc will be the same but food, craft, outings etc will be in proportion to the number of mindees you have. Having said that I live in a 4 bed house and I don't like being cold, I work more than 40hr a week so claim the full 33% £500pa + 10% Council Tax £145 and 10% Water Rate £24 a total of £669. Ins, NCMA memsp, Ofsted Reg, Data Protection Reg, Under £200 so Fixed costs are covered in £1000 maybe a bit more.

Again personally I would be concerned if my expenses on a 12000 income were 6000. Why bother working?

Yes I am lucky earn 3 times that, though my fees aren't that high, my food expenses alone are £4-5000 a year but my total expenses are never more than £9-10000 a year. All the advise I have been given indicates that you are on sticky ground if you exceed the 1/3 ratio.

I can see in the first couple of years expenses may be higher but why would you do an incredibly mentally and physically demanding job however much you enjoy it for such a low return? On the £12000 on my ratios you could be earning as much as £40pw more even after paying tax, which is quite a lot of money.

I know we all hate paying tax, but actually paying out a huge amount of expenses is not the most efficient way and it is actually more benificial in the long run to pay a bit more in tax to gain a higher net income.

[funfunfun]

The 12000 was just an example
I wont even make that !!!

I do see your point , I previously worked in a school and paid £240 a week in childcare for my own .............For me even if i do only earn 6000 after expenses its more than i had before iyswm......so while it may not be a lot to some people it is to me .

Then there is the added benefit of being home with my own children , being able to go to assemblies concerts and take them to school & pick them up myself .

I dont think i will earn that much at all im not that fortunate to have lots of mindees on my books at the moment one leaving at the end of the month as mum is moving out of the area and another in June as college course finishes .
Then my weekly income will go down lots !!!!

[rickysmiths]

The 12000 was just an example
I wont even make that !!!

I do see your point , I previously worked in a school and paid £240 a week in childcare for my own .............For me even if i do only earn 6000 after expenses its more than i had before iyswm......so while it may not be a lot to some people it is to me .

Then there is the added benefit of being home with my own children , being able to go to assemblies concerts and take them to school & pick them up myself .

I dont think i will earn that much at all im not that fortunate to have lots of mindees on my books at the moment one leaving at the end of the month as mum is moving out of the area and another in June as college course finishes .
Then my weekly income will go down lots !!!!

You may surprise yourself one day. £12000 is £360pw gross so you only need a couple of full timers or the equvilent in part timers and you are there.

All I was trying to illustrate with your example was that ok you may be happy with £6000 but with simple accounting you could make it worth up to £40pw more I would mind that. Even if you do have to pay a bit of tax.

[manjay]

My expenses over the last few years have been way over 50% and I can prove every single penny. My main reason for doing this job is definitely not the money. It suits me and my family, it means I don't pay childcare, I am able to take and collect my own children from school, I have found something I really enjoy doing and I am able to fulfil my own dream of getting a degree at the same time. I have no desire for 3 full timers as that just wouldn't suit me but I do spend lots on resources. I do this because I want to!

[jumpinjen]

Again personally I would be concerned if my expenses on a 12000 income were 6000. Why bother working?

I can see in the first couple of years expenses may be higher but why would you do an incredibly mentally and physically demanding job however much you enjoy it for such a low return?

rickysmiths, if i were running it as a business purely and simply then yes I think i could bring in a hefty lot more than i do and make more after expenses however.... i DON'T do it purely for business....... neither do i do it for the fun of it..... I do it completely to facilitate my being at home with my own children and work to a minimum at present to make sure are not on a constant merry go round of pick-ups and drop offs and different children. Don't get me wrong.... i work very hard to be the very best childminder i can for the children that i care for but my priorities are not career and business orientated at the present time.

i think that everyone works for different reasons and to capacities that suit them..... as we know fees vary from £2.50 still in very hard up areas to £6 in affluent areas and so what you bring in varies by area as do expenses depending on what you provide etc.... we are also all at different stages of 'business savviness' and will alter as we learn......

I don't think that it's helpful to scare people about what they do and don't claim, I'm sure that the vast majority claim within the legal remits and it is nigh on impossible to say that once people get to 33% of gross they should stop claiming?? gross incomes flex throughout the year for many..... it isn't a hard and fast thing to calculate!

Jen x

[tulip0803]

Expences are individual and vary from minder to minder. The last 2 years I have made a loss (I am working part-time/childminding part-time). The recession hit this area very bad and when I was minding I was often only have 1 child at £3 ph. To go anywhere here I have to use a car so mileage is high. I still take the child to the places I would take a full 3 as why should they miss out on life and experiences just because my work is slow. I wanted to hang on to my registration and keep working as I know these troughs happen and the work comes back in again.

Work has picked up for me since last Feb/Mar time and I know that for this tax year I will be owing tax and am saving for it. My expences are working out about 50%. However as I still work part-time my tax free allowance is used up in that job so I have to pay tax on all profit from minding. As long as you can prove and justify the expences to the tax man if they ever come a knocking then it should be fine.

I have had the tax man ask for my books as my income dropped dramatically from the previous year. I said no problem but did they know that I had a baby and stopped work in November and then moved to Wales so had been on MA and not working for the rest of the tax year. Answer "Oh that explains it! We don't need your books." They are human and they do understand that life happens.

[rickysmiths]

rickysmiths, if i were running it as a business purely and simply then yes I think i could bring in a hefty lot more than i do and make more after expenses however.... i DON'T do it purely for business....... neither do i do it for the fun of it..... I do it completely to facilitate my being at home with my own children and work to a minimum at present to make sure are not on a constant merry go round of pick-ups and drop offs and different children. Don't get me wrong.... i work very hard to be the very best childminder i can for the children that i care for but my priorities are not career and business orientated at the present time.

i think that everyone works for different reasons and to capacities that suit them..... as we know fees vary from £2.50 still in very hard up areas to £6 in affluent areas and so what you bring in varies by area as do expenses depending on what you provide etc.... we are also all at different stages of 'business savviness' and will alter as we learn......

I don't think that it's helpful to scare people about what they do and don't claim, I'm sure that the vast majority claim within the legal remits and it is nigh on impossible to say that once people get to 33% of gross they should stop claiming?? gross incomes flex throughout the year for many..... it isn't a hard and fast thing to calculate!

Jen x

Oh dear I didn't mean to offend or scare people

I also childmind in order to be at home with my children and that was why I started cm all those years ago. I thoughly enjoy it.

All I am trying to say is be aware of your expenses. It seems to me from reading posts and threads on here a lot of people seem to see it as a way to
avoid paying tax. That the more expenses you rack up the less you pay in tax. That may be the case but it may not be the best way to maximise the income you already have even if you end up paying some tax. I am relating my experiences with the IR over the years and what I have been advised and the impact it has had on my income. Others have different experiences.

I though one of the reasons we use this wonderful Forum was to share experiences and ideas. We all learn new things all the time whatever stage we are at in our cm life. If that helps someone then that is the aim. I have certainly learnt a lot on this Forum from a lot of wonderful people who are willing to share their knowledge and experiences.

[Chatterbox Childcare]

I have read this thread from start to finish with interest and can see two different stories.

I like Rickysmith don't have children in the Under 8's age group and therefore we are working for money, although we enjoy the job, and we are looking to maximise our earnings and therefore have a high income

Others are the opposite and have a low income

When mine were smaller I found that my expenses were higher per head because the costs were spread over few heads but now I have 14 families my cost per head is lower and therefore my expenses are lower by comparison to my income

I think you have to look at your circumstances individually and if you have your paperwork in place with the relevant receipts then your expenses are what they are.

[jumpinjen]

[QUOTE=rickysmiths;855670]Oh dear I didn't mean to offend or scare people

QUOTE]

I agree that we are here to offer our experiences and knowledge to one another, there were just some comments along the lines of "I wouldn't like to be in your shoes...." that were made (can't remember by who) that weren't very helpful and I know that people on here before have expressed that they panic about what they are doing after they have read a thread and that perhaps the 1/3 limit expressed might make people panic and not claim legitimate expenses.... i think it is very hopeful that you make such a good income and i hope that I can one day when my littlies grow up!! I don't think you offended anyone, certainly not me!

Jen x

[MaryMary]

I love a thread with a good debate!

I don't think anyone meant to offend anyone, and I am glad we are all friends again

I think Debbie summed it up very well.

My earlier point was expressing concern for a cm friend of mine that although averaging maybe £2000 gross income, still manages to pay no tax, but manages to afford a caribbean criuse She has been childminding for 7-8 years, and is well extablished. I just tried to warn her that she might get investigated, but she got a bit shirty with me I am saying no more to her now about it, as she is a grown up, and she assures me it is all above board, and they can check if they like! I hope she is right, otherwise that is a big bill!

I didn't mean to scare anyone though

[jumpinjen]

I love a thread with a good debate!

I don't think anyone meant to offend anyone, and I am glad we are all friends again

I think Debbie summed it up very well.

My earlier point was expressing concern for a cm friend of mine that although averaging maybe £2000 gross income, still manages to pay no tax, but manages to afford a caribbean criuse She has been childminding for 7-8 years, and is well extablished. I just tried to warn her that she might get investigated, but she got a bit shirty with me I am saying no more to her now about it, as she is a grown up, and she assures me it is all above board, and they can check if they like! I hope she is right, otherwise that is a big bill!

I didn't mean to scare anyone though

What.... you can't put one through on expenses? since when?

Joke.... only teasing!! Perhaps her OH has a fabby dabby pay packet!

[wellybelly]

Thanks Jen,
Did a search and yes, can only put through the annual depreciation% and a business% of the INTEREST paid on my car loan (not the full monthly repayment)
Now to dig out paperwork to find out the interest I'm paying
Carol xx

This is what I claim for - just a percentage of the interest. I put a bit through every year.

[Chatterbox Childcare]

Thanks Jen,
Did a search and yes, can only put through the annual depreciation% and a business% of the INTEREST paid on my car loan (not the full monthly repayment)
Now to dig out paperwork to find out the interest I'm paying
Carol xx

You can't do the annual deprecation on your car if you are claiming .40p though. it has to be one or the other

As to your mortgage interest BEWARE this isn't as plain as it seems. See my earlier thread on the subject

In the words of the HNRC - don't open that can of worms. There is a name and number of someone you can discuss this with.

[Carol M]

[QUOTE=DebbieS26;856206]You can't do the annual deprecation on your car if you are claiming .40p though. it has to be one or the other

Not doing the 40p on top of depreciation. I have been talking to a lady ex HMRC and she has advised me to see which route is more in my favour . EITHER the depreciation and % of interest. OR, forget the depreciation and put % of HP not just the interest. It may be beneficial to go the second route as can claim this for the duration of the loan. In April I will find out the exact % of business use and will get final advice from an accountant.
Carol xx

[rickysmiths]

[QUOTE=Carol M;856264]

You can't do the annual deprecation on your car if you are claiming .40p though. it has to be one or the other

Not doing the 40p on top of depreciation. I have been talking to a lady ex HMRC and she has advised me to see which route is more in my favour . EITHER the depreciation and % of interest. OR, forget the depreciation and put % of HP not just the interest. It may be beneficial to go the second route as can claim this for the duration of the loan. In April I will find out the exact % of business use and will get final advice from an accountant.
Carol xx

Oh I would be interested to here about this because at present I claim the 40p and the interest element of my car loan as advised by my accountant but didn't realise I might be able to claim a % of the loan as well.

[MaryMary]

What.... you can't put one through on expenses? since when?

Joke.... only teasing!! Perhaps her OH has a fabby dabby pay packet!

She is a single parent - has been since I have known her (about 19 years ago!) - and happy with that

[MaryMary]

Not doing the 40p on top of depreciation. I have been talking to a lady ex HMRC and she has advised me to see which route is more in my favour . EITHER the depreciation and % of interest. OR, forget the depreciation and put % of HP not just the interest. It may be beneficial to go the second route as can claim this for the duration of the loan. In April I will find out the exact % of business use and will get final advice from an accountant.
Carol xx

I was told by HMRC that once you had chosen a method, you had to stick to it for the duration that you have that car So you can only decide when you change car.
You will have to let us know what your accountant says, as the 40p per mile hardly covers petrol nowadays, let alone wear & tear, servicing, etc

[Chatterbox Childcare]

[QUOTE=Carol M;856264]

You can't do the annual deprecation on your car if you are claiming .40p though. it has to be one or the other

Not doing the 40p on top of depreciation. I have been talking to a lady ex HMRC and she has advised me to see which route is more in my favour . EITHER the depreciation and % of interest. OR, forget the depreciation and put % of HP not just the interest. It may be beneficial to go the second route as can claim this for the duration of the loan. In April I will find out the exact % of business use and will get final advice from an accountant.
Carol xx

That is what I did. I use depreciation and am about to sell my car and because the car is worth more than the written down value (I have depreciated it to about £200 now) I have to pay tax on the difference.

[Carol M]

I was told by HMRC that once you had chosen a method, you had to stick to it for the duration that you have that car So you can only decide when you change car.
You will have to let us know what your accountant says, as the 40p per mile hardly covers petrol nowadays, let alone wear & tear, servicing, etc

New car for 2010-2011 tax year so writing down all business miles and all costs will submit Jan 2012 when I find out which way is best.
Carol xx