Income Tax Help

Charly_Wilson

Hello,

My daughter works for an insurance company and is PAYE, she earns around £28.000 per year. She’s started to do some cleaning work for her Grandmother who has Parkinson’s disease it’s just to earn a little extra cash and help towards her mortgage. She does two hours cleaning for £30.

Her grandmother has to contribute towards the cost of her care which she receives from her local authority. My daughter gives her a receipt for the money, the receipt is then sent to the county council who takes off the £30 per week against Grandmother's care bill.
The local authority has said my daughter needs to be registered for tax, so I was hoping somebody could explain how we go about doing this and as a married person how much tax she would pay?

I fear there’s going to be a lot of red tape involved, which is a pain as I’m caring for my own wife who is severely disabled and now on palliative care.

Thanks in advance for your help.

00ec25

there are loads of pages that explain how to register as self employed. Use google.
here is your starter: https://www.gov.uk/working-for-yourself

that said, she should also check what costs she will incur doing this work as she has a choice on how to work out her taxable profits from her self employment:
a) (52x3o)= £1,560 pa gross income - £1,000 trading allowance = £560 taxable profits which @ 20% = £112 tax payable
or
b) she works out her actual costs and if those are > £1,000 she claims them instead of the allowance, and thus pays tax on a lower profit figure

note
the above assumes the only work she does is cleaning for her grandmother and therefore she cannot be treated as a carer and thus there is no risk that granny will be legally held to be an employee and she an employee rather than self employed.

laticsforlife

It would seem easy to reduce that £1,560 figure for the costs of a) getting there (aka mileage allowance to come off) and b) materials purchased (if any).

Bring it under £1,000 and there is no requirement to register, so tell the council that.

The Council have literally no power to insist this kind of thing, how would they go on if it were an invoice provided from some 3rd party who your GM didn't know!

I'd create a proper invoice on headed paper (easy to run up in Word) and produce that on a monthly basis, and make sure the payment comes out afterwards to match. If they want a tax reference then put your NINO on it, you don't need a UTR as there is no requirement to register, and in fact HMRC will 'kick you out' of SA if that is the case.

It's this kind of bureaucracy that makes councils run out of budget, fussing over £30 whilst they allow contractors to charge £1,000 to change a bulb, grrrrrr.

Charly_Wilson

Thanks for your reply and for the link.

It looks like it won’t be too difficult to set up as we originally thought.

The local Authority mentioned about being VAT registered, and she should have number for her Tax reference, do you if that would apply to my daughter?

uknick

No, your daughter doesn't have to be VAT registered, assuming her trading income won't exceed £85k for the tax year.

When you say the council take £30 off the grandmother's care bill, do you mean they are asking her to pay £30 less to the council for her care?

Charly_Wilson

Yes that’s correct. At the moment she pays £99 per week towards the cost of her care, so that will be reduced to £69, but as she’s paying the Granddaughter money for domestic services she’s no better off.

Charly_Wilson

Thanks for your reply. Tax reference NINO, what does that stand for? And what’s a UTR?

00ec25

laticsforlife wrote: »

, you don't need a UTR as there is no requirement to register, and in fact HMRC will 'kick you out' of SA if that is the case.

errr….
https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

• self-employed as a ‘sole trader’ and earned more than £1,000

However, I do agree that going forward as the taxable profit would be "low", and she has a PAYE job, the tax due could be collected under PAYE via a code adjustment.
But that is a question for a later date once she has shown HMRC the level of her income on a tax return.

00ec25

Charly_Wilson wrote: »

Thanks for your reply. Tax reference NINO, what does that stand for? And what’s a UTR?

National Insurance Number


Unique Taxpayer Reference - the number you are given when you register for a tax return

Charly_Wilson

The Local Authority said, as she’s a relative doing the cleaning, my daughter and her grandmother would have to draw up a small contract and then write on every receipt confirming she’s registered to pay tax. Personally I think its B S

She would earn £30 per week, as she can’t drive she would have to rely on taxis, @ £7 there and back equals £14 in expenses, so she would earn £16 for two hours cleaning a total of £832 per year so she might be OK

uknick

Charly_Wilson wrote: »

The Local Authority said, as she’s a relative doing the cleaning, my daughter and her grandmother would have to draw up a small contract and then write on every receipt confirming she’s registered to pay tax. Personally I think its B S

She would earn £30 per week, as she can’t drive she would have to rely on taxis, @ £7 there and back equals £14 in expenses, so she would earn £16 for two hours cleaning a total of £832 per year so she might be OK

The council may be used to full blown Ltd companies doing this sort of work and to that end they give the care cost discount. As it's a relative doing the work the council may well want to cover themselves. They might need to prove it's a legitimate cleaning service being paid for; a contract is a good way of showing the commercial nature of the arrangement.

Or it could just be twaddle :rotfl: