Are you looking to save money through a Childcare voucher Scheme?

A question we get often asked by our recruitment director clients' is; 

'Should I be operating a childcare voucher scheme through my own limited company?'

The facts.

An employer operating the Childcare voucher scheme will allow each parent paying basic rate tax, up to £55 per week or £243 per month tax free childcare for children up to the age of 15. Higher rate tax paying parents are allowed up to £28 p/wk and £124 p/mth respectively. Any vouchers exceeding this amount are subject to tax and NI and must be included on a form P11D. 

So, many limited company directors who employ their spouses, have use of twice the amount of vouchers. 

It works by having either a deduction in your salary (via a salary sacrifice) saving tax &NI, or having an addition to your salary, and having it as a company expense. 

Care needs to be taken when coming to a decision on which option to take. 

How it's done.

  • Your childcare provider must be registered with the OFSTED scheme. You can find out this information from the OFSTED website.

  • Set your scheme up IN YOUR COMPANY'S NAME through HMRC or pay for a scheme administrator such as Kiddivouchers or Edenred to do this for you.  

  • If you choose to use a scheme administrator they will charge commission on supplying the vouchers for this but is allowed as an additional business expense. (Yet more tax savings!) 

  • Payments MUST be made through the company bank.

The future of the Childcare Voucher Scheme.

The childcare voucher scheme is running out and no further parents can apply to join the scheme after April 2018.

You may already be aware of the Government's new 'Tax-free childcare' scheme which is being introduced from 2017. It will then be necessary for parents to decide which scheme would be more beneficial to them. There are more strict conditions with this new scheme. For example, both parents must be working and earning over a certain amount to enter the scheme.

How it works under the new 'Tax-free childcare' for every 80p paid into the scheme, the government will top this up by 20p up to a total of £10,000. For parents with lower childcare costs such as a couple of days a week, the current childcare voucher scheme may be more beneficial to them.

To conclude, in my opinion it is beneficial to enter the scheme and operate the vouchers through your limited company as long as your administration costs stay low and the costs don't outweigh the benefit. We will see what happens when the new 'Tax-free childcare' scheme is introduced next year and whether my view will change.

post by caroline

post by caroline

If you would like further information on how to set up a childcare scheme through your own limited company, please contact Cooper Curtis on 0845 303 1144 or email info@coopercurtis.co.uk.

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published

Tax Return Checklist

As the tax return season is upon us, we have compiled a checklist for you to use when gathering information...

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

Do you run a Recruitment Business and are looking to employ an apprentice?

Are you a recruitment business owner looking to take on more employees? Have you considered taking on an apprentice? You could be eligible for a grant of up to £1,500 from the government under the employer apprenticeship grant scheme and be paid up to 5 grants in total per apprentice.

What's more, the grant income is offset as your wages expense therefore you don't pay any tax on this. To see if you are eligible for the grant, fill out this online form but hurry as this only subject to availability until December 2015!

The grant is available for 16 to 24 year olds and you must pay your apprentice at least the minimum wage and they work for at least 16 hours per week. Apprentices must be offered the same conditions as other employees such as sick pay and benefit and be asked to sign an apprenticeship agreement.

Employer National Insurance break

If your apprentice happens to be between the ages of 16 and 21, you no longer pay secondary employer national insurance contributions on their earnings up to the upper earnings level (£42,380 for 2015/16). This came into effect from April this year.  

 

Due to our industry knowledge, Cooper Curtis help recruitment businesses with their accounting and tax requirements as well as providing ongoing business support because we understand the challenges you face.

For more information on how we can help you raise your game, visit our website or alternatively call 0845 303 1144 or email  info@coopercurtis.co.uk to arrange a free meeting.

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.