Childminders are self employed and responsible for their own tax and national insurance. You are legally obliged to contact the tax office as soon as you start working as a childminder and inform them - you can register online. You will then receive a self employment tax return the following April.
You must inform the National Insurance office that you are self employed and pay class 2 contributions - unless you are entitled to an exemption. Contact NI for more information.
· The tax year runs from the previous April to the current April, so you cannot give any figures that relate to income/expenditure outside of these dates;
· If you make a loss in your first year, do not panic – lots of childminders do, because of buying toys, resources and other start up costs. Your tax return must show your income from any start up or other grants as well as childminding income;
· You must keep your business records separate from household – some childminders choose to use a separate bank account but this is a matter of choice;
· You will need 3 main figures for your tax return – income (from childminding, any other jobs, taxable benefits, houses you might rent out, bank investments etc)... minus expenses (as below)... equals total taxable figure;
· You do not need to keep receipts for purchases under £10;
· You must keep your records for 5 years after the end of the tax year;
· You are advised to keep food receipts for 3 months, to comply with food hygiene regulations - this is not an Ofsted or tax office requirement;
· Your accounting books are not of interest to Ofsted;
· Don't put large amounts of expenses you cannot justify;
· Don't put through things if you don't have proof of purchase for them;
· If you put through a total of £12000 with £7000 loss to expenses one year, DO NOT put £10000 with £8000 loss the next unless you have a very good reason ... it looks wrong and will shout fraud.
FREE guidance to all things expenses related for childminders on the Childcare.co.uk free childminder paperwork page.