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Post Info TOPIC: Child minders tax return


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Child minders tax return
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I am doing helping a friend with her tax return and have a couple of questions. She is currently invoicing her clients for mileage and childrens meals,

> does this means that she cannot claim mileage allowance on her tax return or food for childrens meals ?

> she bought a seven seater car for business use, am right in thinking that she cannot introduce this into the company as she is claiming mileage?

> going forward, is she better off claiming for mileage and childrens meals on her tax return or continue invoicing customers as she is already doing?

Many thanks

 



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Your friend can claim her mileage and meals even if the parents pay it. Otherwise it would show a high sales figure and due to less expenses a higher net profit meaning she'd be paying more tax than needed.

She can claim a portion of vehicle expenses or mileage, but not both. My understanding is that you can change how you claim vehicle expenses so must start as you mean to go on. To work out which is the best you'd need to calculate both.

Kris

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Hi Liz, is your friend running a limited company or her own self employed business?

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Kris, thanks for your helpful reply.

 



-- Edited by Liz Hardy on Sunday 1st of January 2012 11:18:29 PM

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she is self employed.

 



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Liz Hardy wrote:

I am doing helping a friend with her tax return and have a couple of questions. She is currently invoicing her clients for mileage and childrens meals,

> does this means that she cannot claim mileage allowance on her tax return or food for childrens meals ?

> she bought a seven seater car for business use, am right in thinking that she cannot introduce this into the company as she is claiming mileage?

> going forward, is she better off claiming for mileage and childrens meals on her tax return or continue invoicing customers as she is already doing?

Many thanks

 


Hi Liz,

She can introduce the vehicle into the accounts of the business but cannot claim capital allowances as well as the mileage rates.   If it qualifies for AIA and depending on the private use proportion, then the traditional expenses approach + capital allowances can be better in the first year, but inferior from then on.   She cannot change the method until she changes the vehicle.

The 10,000 mile rate has gone up to 45p now but this link gives those for 2010/11 on page 4.   These are claimed along with the other profit and loss details on form SA103.

http://www.hmrc.gov.uk/helpsheets/hs222.pdf#page=3

best wishes,

Tim



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Don Tax, thanks for your reply.  Please can you advise on whether she can claim mileage allowance and food allowance, clubs etc if she is already invoicing her customers for this?  Going forward is she better off claiming mileage food etc as an expense instead of invoicing customers?

 

 



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Yes Liz, she can claim the mileage allowance. I'm not sure what you mean by "food allowance, clubs" unless you mean expenses.

The detail on her sales invoices doesn't matter; I suggest just thinking of it in terms of gross income and expenses.

Hope that helps
Tim



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Hi Tim

She provides meals for the children she looks after and recharges the parents on her monthly invoices, clubs and playgroups etc.  So am I understanding this right - she can recharge the parents and put it down as income and claim it as an expenses on your tax return?

Thanks

Liz

 



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Yes, spot on Liz.

All the best.
Tim

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I think you'll find the information about childminders expenses at link below useful.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM52751.htm



-- Edited by YLB-HO on Monday 2nd of January 2012 09:42:54 PM

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Thanks, Frauke. Never so much as heard of that agreement.

Liz, it might be an idea her joining the NCMA and getting hold of that guide.
Tim


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Liz, this sounds to make like a bit of confusion on the basic bookkeeping principles.

The amount on her invoice is what she charges to the customer, i.e. a Sale

The amount she is spending is her cost i.e. a Purchase

She is not claiming or charging it twice.



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Hi All,

I've had an enquiry from a child-minder who has asked me if I could help her with her accounts. She has only just commenced business in the last couple of month so it's at an early stage.
She hasn't registered with HMRC yet so I have advised her to do so as soon as possible.

Are the tax returns of a child-minder relatively straight forward? I've had a look at the expenses and how to calculate household bills etc so not to worried about that.

Is there anything I should be looking out for or anything in particular that I need to know.

The lady has told me she is going to use me but until work commences nothing is definite.

Help/advice appreciated.

Elaine

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