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Working tax credits changes
Please can you reply to this thread IF you are affected by or might be affected by the changes to Working Tax Credits and/or if you have received a letter telling you to produce information for WTC and/or if you are worried about how the WTC changes will affect you financially.
This is not about HMRC checking tax credits claims - or about people defrauding tax credits - this is about childminders receiving long letters telling them to provide evidence of how they are growing their businesses ...
We are going to try and get help for members who are being affected by the changes - we are writing guidance to help you respond to the letter and talking to the big early years magazines on your behalf and we have approached the main childminder organisations to see if they can advise.
It would be helpful if you could let us know what's happening out there please.
Thank you
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This is the first I have heard of anything like this??? I haven't received any letter from them yet though but I do know that if they cut tax credits I will not survive on the income I receive from doing this
xx
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I haven't had anything or heard anything about it at all.
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From April 2016 WTC will change and affect self employed people including CMs...if you have an accountant you should discuss this with him/her
It may be worth cms taking time to read this Revenue and Custom Brief 7 (2015) from the HMRC which was recently put on the .Gov website
These are some of the extracts (in bold)
From 6 April 2015, all new claimants who are using self-employed work to meet the qualifying remunerative work test for WTC, must show that they are trading on a commercial basis and their business is done with a view to achieving profits. The self-employment should also be structured, regular and ongoing. For example, if their business activity is a hobby it is not likely to be considered commercial or have an expectation of realising a profit.
These checks are about ensuring HM Revenue and Customs (HMRC) only pay tax credits to those who are entitled. WTC will continue to support those who are carrying on a genuine business activity. These changes will not affect the rules for claiming Child Tax Credit.
[B]Self-employed WTC claimants with earnings below a threshold (this will be based on working hours and the National Minimum Wage) will be asked by HMRC to provide evidence that they are in a regular and organised trade, profession or vocation on a commercial basis and with a view to achieving a profit.
The information we ask for should be available as part of normal business activity, for example receipts and expenses, records of sales and purchases. We may also ask for supporting documents such as a business plan, planned work, cash flow and profit projections
For more information look at this link and save it for future reference
https://www.gov.uk/government/public...ing-tax-credit.
maybe worth reviewing your business and sustainability in time for April to meet these changes if they affect you.
Good luck!
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I got a letter last week saying they may look at my books as I need to be making a profit in their eyes
Tess1981
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Originally Posted by
tess1981
I got a letter last week saying they may look at my books as I need to be making a profit in their eyes
Surely any income we quote to them is profit isn't it?? Or am I missing something here
xx
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Originally Posted by
AliceK
Surely any income we quote to them is profit isn't it?? Or am I missing something here
xx
Yes but what they are saying it's not enough profit
When someone tells you nothing is impossible, tell them to go slam a revolving door
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Originally Posted by
FussyElmo
Yes but what they are saying it's not enough profit
Oh I see.
Well so they want "affordable" childcare for parents but we as childminders are not making enough profit. I wonder what figure they are going to put on it then - the min acceptable profit.
Maybe we should all double our prices or something so that we make more profit
xx
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Post Thanks / Like - 0 Thanks, 1 Likes, 0 Dislikes
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Originally Posted by
AliceK
Oh I see.
Well so they want "affordable" childcare for parents but we as childminders are not making enough profit. I wonder what figure they are going to put on it then - the min acceptable profit.
Maybe we should all double our prices or something so that we make more profit
xx
I think and don't quote me they are expecting for SE people to earn the equivalent to 37 hours at min wage
When someone tells you nothing is impossible, tell them to go slam a revolving door
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Originally Posted by
FussyElmo
I think and don't quote me they are expecting for SE people to earn the equivalent to 37 hours at min wage
This is what I was thinking. I work 50 hours + per week and earn nowhere near NMW. It's a real worry. What would the government prefer? We all give up work?!!
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Originally Posted by
JoRo163
This is what I was thinking. I work 50 hours + per week and earn nowhere near NMW. It's a real worry. What would the government prefer? We all give up work?!!
Same here. 50 hrs per week and I would love to be earning the NMW for that but it's not gonna happen any time soon
I just did a quick calculation and I would need 3 x full-time children each paying £4.50ph to hit what they are wanting then. Now where to get the equivalent of 3 x FT children. I'd better start looking.
xx
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It's not something I've heard about. It sounds like they are trying to push people into better earning jobs. Unfortunately, if all the childminders have to quit to look for new work who on earth will look after the children!
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when Universal Credit replaces many benefits, the will work payments out 'on what they are expecting for SE people to earn the equivalent to 37 hours at min wage'. So everyone who has been pushed into SE will now find out they aren't entitled to a thing to support their low incomes. See this link, very worrying: Universal Credit and the self employed | Universal Credit
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Originally Posted by
AliceK
Oh I see.
Well so they want "affordable" childcare for parents but we as childminders are not making enough profit. I wonder what figure they are going to put on it then - the min acceptable profit.
Maybe we should all double our prices or something so that we make more profit
xx
I had to laugh at this. You are so right.
They want us to make a huge profit so they probably don't have to give us tax credits yet everyone and their granny wants childcare for peanuts...
Best of all prices over the water here are A lot less that in England. So we make even less...
What I earn makes me a profit but is also under the tax threshold and I also get tax credits. If I earn more I lose tax credits it's explaining that to them lol
Tess1981
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Post Thanks / Like - 0 Thanks, 1 Likes, 0 Dislikes
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Originally Posted by
AliceK
Oh I see.
Well so they want "affordable" childcare for parents but we as childminders are not making enough profit. I wonder what figure they are going to put on it then - the min acceptable profit.
Maybe we should all double our prices or something so that we make more profit
xx
Wise words AliceK...time to put one of those 6 thinking hats on!!! ...one of them must have a 'financial' window!
maybe not double our fees but cms must surely look at making a living out of running their own business....what it is about otherwise assuming we do it because we really love to care for other people's children?
Millions of self employed singly run businesses will be in the same shoes once the WTC are cut in April...so cms are not the only ones to suffer....but they need to act not react ...don't you think?
Nurseries will have employees who lose their TC but they also face a rise in wages hence the reason thay are saying fees will go up.
I would suggest a policy of 'yearly fee review' embedded in the contract !!
Some cms rarely raise their fees against a constant rise in prices for all we have to use to run our businesses....apart from petrol there is little we need that does not go up regularly.
Another thought..the DfE has said they will offer £4.85 for their new funding when it eventually kicks in....should Cms not match that or even better that.
It is a difficult decision but here we are looking at survival and also we need to look at the amount of help toward childcare the govt is offering 'working parents'''cms too are working parents ...NOT charities!
I hope you will act on your wise thinking!
Profit is not a dirty word when running a small business...running at a loss is ...I think...not wise especially when it means subsidising govt policies!!
Last edited by Simona; 06-01-2016 at 10:25 AM.
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Simona, I was under the impression that the £4.85 included Pupil Premium at 50/55p, am I wrong? Plus is this the amount after the La's have taken their chunk of cream from the top or has that not been announced yet?
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Childminding must be one of the few occupations where the government limits your earning potential by having ratios in place, but at the same time will expect you to make a profit equivalent to minimum wage.
Once they start to look into it I hope they realise that childminding is different to most businesses. Although it won't affect me, I do have a lot of cm friends who are quite worried about it.
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Originally Posted by
moh
Simona, I was under the impression that the £4.85 included Pupil Premium at 50/55p, am I wrong? Plus is this the amount after the La's have taken their chunk of cream from the top or has that not been announced yet?
I believe you are correct and that is how I understand it...£4.85 includes EYPP where applicable and it is a very complicated formula worked out by the DfE
That is the amount announced...not sure if it is before or after the 'creaming off' used by LAs for administration......we will hear more once we have had a consultation which is due out in the near future and we get feedback from the implementers.
As the money given by the DfE is a subsidy cms can match it or charge what they feel makes the business viable and provides some kind of profit...I would never charge below that new figure
Mouse is correct we are limited by ratio but not limited in personal decision on what to charge....it is our business and our services we sell to parents.
Personally I think it is possible to reach the MW if we want to
At the moment many cms are against any of the new policies...we need to wait and see...I believe cms will be in demand soon to share the 30 hours....all we can do is keep updated and informed.
Last edited by Simona; 06-01-2016 at 04:52 PM.
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Originally Posted by
Simona
Mouse is correct we are limited by ratio but not limited in personal decision on what to charge....it is our business and our services we sell to parents.
Personally I think it is possible to reach the MW if we want to
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I agree, but only if you can use your full numbers. What about childminders who have 2 EYs children of their own, as I did when I first started cming? I actually had 2 EYs age children and a 5yr old when I started so could only have one EYs mindee (I chose not to take on any school aged children as I had no experience of them then!) If a cm was in a similar situation today they would struggle to make minimum wage from one child.
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Post Thanks / Like - 0 Thanks, 2 Likes, 0 Dislikes
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Originally Posted by
Mouse
I agree, but only if you can use your full numbers. What about childminders who have 2 EYs children of their own, as I did when I first started cming? I actually had 2 EYs age children and a 5yr old when I started so could only have one EYs mindee (I chose not to take on any school aged children as I had no experience of them then!) If a cm was in a similar situation today they would struggle to make minimum wage from one child.
You are correct again as it does depend on the number of places we can fill
Having their own children the income is restricted and that is something cms have to consider when starting childminding unless they are happy just making a little money if they do not wish to take older children....or have income from a partner/husband.
For me the business side is important....I would rather see cms doing a good business training alongside all the pre registration procedures than finding out later it may not work while subsidising childcare and all that goes with it.
I think cms are resilient and if they rethink their practice it can work in the end.
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