As an Ofsted registered childminder, you need to:
**Register with HMRC as self-employed.
**Keep a record of your income and expenses.
**Pay tax and National Insurance on your profits.
Childminders do not earn a wage - your income is whatever money is left over after paying your expenses.
Total income
You need to record everything you earn as a childminder including money from parents, funding, grants etc.
**You might find it useful to send invoices to parents and keep a monthly list.
Total expenses
You need to record everything you spend for childminding.
**Childminders have their own rules for expenses – see HMRC document BIM52751 for more information –
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim52751.
Example childminder expenses
**General expenses - all spending directly linked to your childminding plus...
**Household costs detailed in the above HMRC BIM52751 guidance – plus...
**Food and drink – you can claim reasonable estimates (HMRC do not require receipts) plus...
**10% wear and tear – 10% of your total income plus...
**Travel – either 45p / mile OR capital allowances on the HMRC website plus...
https://www.gov.uk/capital-allowances/business-cars
**Under £10 incidental expenses (HMRC do not require receipts) plus...
**Family expenses – a fair and reasonable % if used for childminding and family plus...
**Training – statutory courses including paediatric first aid and safeguarding.
Record keeping
You might find it useful to make up a simple Excel table for your expenses which covers, for example:
**Broadband (fair and reasonable percentage).
**Childcare.co.uk fees (100%).
**Council tax (percentage using BIM52751 as a guide).
**DBS renewal (100%).
**Food and drink (reasonable amount).
**Heating and lighting (percentage (percentage using BIM52751 as a guide).
**House insurance (extra paid for childminding).
**ICO annual registration fee (100%).
**Mobile phone usage (use BIM52751 as a guide).
**Ofsted annual registration fee (100%).
**Outings with childminded children (100%)
**Statutory training including paediatric first aid and safeguarding / child protection (100%).
**Sundry expenses (100%).
**Vehicle costs (45p/mile or actual cost).
**Water rates (percentage using BIM52751 as a guide).
**Wear and tear (10% of total income).
You might then find it useful to set up an Excel page to record ongoing monthly expenses for food and drink, vehicle costs, outings and sundry (general) expenses.
Working out your profit / loss
Total income – total expenses = taxable income.
Total income take away total expenses equals taxable income.
Important information 2021-22
Personal allowance – £12,570.
You will pay tax at 20% tax on all income over £12,570.
Class 2 National Insurance – £3.05 week
You need to have set aside £158.60 to pay your class 2 NI for the year.
Class 4 National Insurance – £9,568 @ 9%
You will pay class 4 NI at 9% on anything you earn over £9,568.
This is how HMRC explain payment on account – you need to be ready for it if your last Self Assessment tax bill (tax and NI class 4) was more than £1,000 -
https://www.gov.uk/understand-self-assessment-bill/payments-on-account
How to work out percentages
Example: using a calculator, do the sum £950 x 10%.
For example: your total income for the month is £950. To work out wear and tear you times it by 10%. Your wear and tear to add to your expenses is £95.
Important dates
Paper tax returns – 31st October 2022.
Online tax returns – 31st January 2023.
Tax payments – 31st January 2023.
I am a childminder and I do my own accounts – I am not a tax expert, accountant or qualified bookkeeper. I have always found that it’s straightforward if you follow the HMRC guidance. You should contact HMRC if you need further advice –
https://www.gov.uk/government/organisations/hm-revenue-customs/contact/self-assessment.
Chat soon, Sarah.