Childminders and tax

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Registered childminders are people that work in their own homes to provide care and learning opportunities for other people’s children.
Childminders need to declare their income from their self-employment by filling in a self-assessment tax return every year.
Many childminders are members of the National Childminding Association (NCMA).The NCMA had an agreement with with HMRC in terms of allowable expenses that a childminder can have. They agreed that receipts for items of expenditure will not be required for items costing less than £10.
Also they agreed with the HMRC that full-time childminders (40 or more hours a week)can deduct as expenses a third of their heating and lighting costs and 10% of water rates and Council tax. Food and drink provided for children are acceptable and receipts are not required provided that the figures are reasonable.
Probably not everyone is aware of 10% Wear and Tear relief available to childminders. 10% Wear and Tear of total childminding income may be deducted as an expense to cover the wear and tear of furniture and household items. Once a childminder claims this relief, he/she cannot claim for replacing such household items.
Other expenses allowable in calculating the taxable profit are the cost of toys, books, safety equipment, travel fares, NCMA subscription, Public Liability Insurance, stationary, the cost of phone calls for childminding purposes, cleaning, accountancy fee, children gifts,training costs, resources (like paint, arts/craft)and Ofsted Registration fee(Office for Standards in Education).

For more details regarding childminders and their relationship with tax, you can seek guidance from Taxfile’s tax agents in South London (Tulse Hill) and Exeter.

Allowable expenses that you can deduct from your lettings income

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As promised last week, today we are going to discuss expenses and tax allowances that you can deduct from your rental income when you work out your taxable profit or loss. If you have several UK residential properties you let than you need to add them together in terms of receipts and expenses on the Land and Property Pages provided by HMRC. What you need to bear in mind is that you have to work out your holiday lettings and overseas lettings profits separately.
As i mentioned last week if you choose to use Rent a Room Scheme then you cannot claim any expenses.
The following allowable expenses are deductible in computing your rental business profits, provided they are incurred wholly and exclusively (omnipresent words in the Land and Property tax guides) for the purpose of the business:

• letting agent’s fee;
•utility bills like gas, electricity,water;
•rent which you pay to your own landlord for a property you are subletting;
•cost of insurance , whether of the building or of the contents;
•services you pay for like gardening or cleaning;
•Council Tax;
•maintenance and repairs, but not improvements;
•interest on property loans, provided they incur wholly and exclusively for the purpose of the business;
•accountant‘s fee;
•cost of rent collection;
•legal fees for lettings of a year or less, or for renewing a lease for less than 50 years;
•other direct cost of letting the property like advertising, phone calls and stationery.

So, if the tax on property income still leaves you in dark, Taxfile’s tax accountants can help you as a landlord get a better picture of it. Their accountants in South London will assist you with filling in tax forms, preparing your accounts and dealing with Inland Revenue on your behalf.