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Expenses How..?
Hi all, I have just become a registered childminder and I have a few questions about expenses. My questions will probably sound a bit basic but to be honest I don't understand the whole claiming process and how it works....:rolleyes:
I have read on this forum that some of you are claiming back expenses and I am thinking that this could really help me out, but I don't understand who you claim from and how and what you get paid back? I don't earn or mind a lot and am only getting about £250 a month from it as a favour for a friend.
Can I ask, When you claim expenses what are you actually getting back in return and how do you claim them? Are you getting the whole amount back or just the TAX and VAT back etc.?
Say for example if I were to earn £100 a month from minding and I needed to spend £60 of that on expenses how much of that £60 will I actually see back when I put my Tax return in in April etc?
If I don't earn enough to pay tax how can I claim expenses???
I'm confused by the whole process because surely the Taxman doesn't pay it all back in one big lump sum as a return?
I know this is a really basic question, but tbh I've been a house mum for the last 8 years and I have registered from the whole home tuturing route. I haven't been on any business courses so I am finding it a bit daunting....:eek:
Can anyone advise?
Thanks for such a great site, the info on here has been so insightful
AJ
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Re: Expenses How..?
Hi AJ
It is all a bit confusing isn't it!
When we talk about claiming back expenses, what we really mean is taking expenses from your income.
So, you earn £250 a month. Say you spend x amount on food, x amount on toys. You take these amounts off your £250. Plus other allowable expenses such as electric and gas, wear and tear etc.
What you are left with is the amount you declare to the tax man - it might only be £100 of the £250 you took from parents. He doesn't give you anything back, but what you declare takes you below the tax threshold so you don't pay any tax.
Does that make sense?
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Re: Expenses How..?
Also, because you have taken off your expenses if you claim for Tax Credits they will only take into account what you are left with - so say for example you earn only £ 5,000 before you have added up your expenses to take off - you may think "Oh, it's not worth me bothering with the hassle of expenses because I am under the tax threshold anyway" - it WILL matter if you are claiming tax credits because once you take off your expenses (say out of £5,000 you are left with £3,000) the tax credits you receive will be counted on the £3,000 left over - so you will end up with more tax credits. :)