Yr wages lol....

**lorettacritchet** · 29-02-2012, 04:15 PM

asking a childminder (who has been one for over 3 years) for ways/how to save on paying minimum tax or none (Lol) she explained everything i already have been claiming and then informed me she has a certain amount of wages which she gives herself monthly in this example £600 and claims that on expenses. She is with an accountant who checks her books for her self assessment and it doesn't seem to be an issue, do other childminders do this? surely this would lead to everyone not paying taxes lol... i dont have a separate bank account and don't want to because i am dreadful at maths and would prefer to keep an eye on everything from one account. Is that wrong? Is the "wages" even allowed? the accountant seems to think so.

**nikki thomson** · 29-02-2012, 04:19 PM

I didn't know you could do that, my brother in law is a tax man for the inland revenue so I'll ask him next time I speak to him.
I'm intrested to hear what everyone else has to say. X

**EmmaReed84** · 29-02-2012, 04:26 PM

If she pays herself a wage of £600 a month and puts it through as expenses then surely she would just pay taxes on her wage?

I have only been minding since Aug 11 so am yet to do my taxes but that does not sound completely right to me, unless they are pulling a dodgy?

**snufflepuff** · 29-02-2012, 05:10 PM

I'm almost certain this isn't allowed. It's not how being self employed works surely? Your 'wage' is just your profit, so whatever is left over from fees paid to you after expenses are deducted.

**rickysmiths** · 29-02-2012, 05:51 PM

She can't do that! Her 'Wages' are what is left after Expenses and Tax have been taken off Gross Income. She would get into big trouble if HMRC did a check on her.

My accountant would laugh if I asked her do do that!! Ask her and see what she says.

What I am allowed to do is pay my teenagers a nominal amount of 'pocket money' each week for the tidying up, cleaning, and help they give on outings and that is added to my expenses. It was £1100 this time.
I have never had a separate Bank Account for childminding.

I know we all want to minimize our tax bills but if you don't pay any tax you really don't earn that much money either. I don't mind paying tax (well sort of!) because it means I'm earning a decent 'wage'.

**dette** · 29-02-2012, 06:01 PM

My DH has heard that you can do this in a round about way. You need to set up as a 'business' (i.e. a Ltd company) with a business account (usually through an accounting firm which costs money!). Your wages then go into the 'business' and you can pay yourself minimum wage (therefore no or little tax) and take the rest as dividends from the business because it is performing well (these dividends are not taxed at income tax rate but at business tax rate) therefore you can save money and you don't pay tax on money in your business account until you withdraw it. However, it doesn't seem worth the hastle and expense if unless you have a very large income. This is how a lot of contracted workers operate.

**rickysmiths** · 29-02-2012, 06:29 PM

Originally Posted by dette

My DH has heard that you can do this in a round about way. You need to set up as a 'business' (i.e. a Ltd company) with a business account (usually through an accounting firm which costs money!). Your wages then go into the 'business' and you can pay yourself minimum wage (therefore no or little tax) and take the rest as dividends from the business because it is performing well (these dividends are not taxed at income tax rate but at business tax rate) therefore you can save money and you don't pay tax on money in your business account until you withdraw it. However, it doesn't seem worth the hastle and expense if unless you have a very large income. This is how a lot of contracted workers operate.

You might run into Planning issues using a Domestic premises if you did it this way.

**MrAnchovy** · 29-02-2012, 06:35 PM

I was going to stay out of this one as the original situation described was clearly wrong - for the second time today the message is "don't believe everything you hear - especially about tax

".

But dette you have clouded the issue with your post so I am going to have to jump in and point out that the law that governs registered childcare states specifically that a company cannot operate as a childminder: it would be required to register as providing "childcare on domestic premises" which means 2 suitable people on site at all times, 1 with NVQ3 etc.

Now for anyone self employed that isn't a childminder and so can operate as a company instead, there are savings to be made (not in tax but in Class 4 National Insurance which is not paid by companies). The saving starts at a surprisingly low level of earnings, but there are additional costs to having a company (it is almost impossible to get it right without an accountant) and the 'break even' point is about £15,000 profit a year, so it is not just for very large incomes!

**dette** · 01-03-2012, 08:35 AM

Originally Posted by MrAnchovy

I was going to stay out of this one as the original situation described was clearly wrong - for the second time today the message is "don't believe everything you hear - especially about tax

".

But dette you have clouded the issue with your post so I am going to have to jump in and point out that the law that governs registered childcare states specifically that a company cannot operate as a childminder: it would be required to register as providing "childcare on domestic premises" which means 2 suitable people on site at all times, 1 with NVQ3 etc.

Now for anyone self employed that isn't a childminder and so can operate as a company instead, there are savings to be made (not in tax but in Class 4 National Insurance which is not paid by companies). The saving starts at a surprisingly low level of earnings, but there are additional costs to having a company (it is almost impossible to get it right without an accountant) and the 'break even' point is about £15,000 profit a year, so it is not just for very large incomes!

Thanks x sometimes husbands think they know everything so i'll be happy to tell him that he was wrong

**The Juggler** · 01-03-2012, 10:24 AM

sure this is NOT legal. and if you paid yourself a wage of £600 a month then you'd need to pay income tax on THAT

**cara1235** · 01-03-2012, 11:13 AM

What about putting a couple of through a week as expenses charged at your normal hourly rate for the time you have to spend doing your planning/lj's etc????? Can we do this??

**cara1235** · 01-03-2012, 11:13 AM

OOps meant to put couple of hours

**The Juggler** · 01-03-2012, 11:18 AM

Originally Posted by cara1235

OOps meant to put couple of hours

any wages incur income tax so any money you use for YOU rather than the business is subject to that

**rickysmiths** · 01-03-2012, 11:28 AM

Originally Posted by cara1235

What about putting a couple of through a week as expenses charged at your normal hourly rate for the time you have to spend doing your planning/lj's etc????? Can we do this??

You can't do that either. It would be lovely if we could.

**cara1235** · 01-03-2012, 01:23 PM

Oh well worth a try