Can I get childcare 'vouchers' through my own ltd company?(7 Posts)
I'm the sole director of a limited company and my youngest DS has just started nursery. I need advice from the experts as to whether I can get some of the nursery fees paid through the company and, if so, how much, how does it work, and so on!
You have mentioned two different things there - you can either get your company to pay the nursery directly: note that this means that the company has to contract with the nursery directly, they can't just pay your bill, or you can get the company to provide vouchers, either itself (in which case it will need to arrange with the nursery to cash the vouchers which they might not be happy to do) or through a third party provider. This last option is definitely the easiest as the nursery is probably already set up to receive vouchers from the company and you won't have to spend time following HMRC's rules for setting up a scheme as the provider will give you everything you need.
If anyone mentions salary sacrifice then you need to point out that the company will be providing the vouchers as an additional benefit, not through salary sacrifice. There is therfore no National Insurance saving to be made to offset the voucher company's fee so you should look for a provider with a low percentage fee (e.g. 3.5%) and no fixed minimum.
Any good accountant dealing with Owner Managed Businesses should be right on top of this: now might be a good time to get one, or if you already have one ask her why she hasn't mentioned this.
MrAnchovy - thanks as always I'll drop an email to my accountant - he seems a bit vague when i mentioned it in passing when i was expecting (nearly 2 yrs ago!)
One thing (if you have a rought idea) - nursery is 2 half days a week - is it really worth it? WOuld i save much?
Well the maximum you can get is £243 a month anyway, so if the company gives you that in vouchers with an admin fee of 3.5% its pre-tax profit will go down by £3,018pa so after tax it will have £2,414 less to pay you in dividends but will pay for £2,916 of childcare thus saving £500 overall. If there are two directors this saving doubles of course.
Do you think you get good value from your accountant?
Note that the above calculations assume that your total income (including dividends) is within the basic rate band.
Direct payment from your company to the nursery for £243 a month - doesnt affect your paye - and you can treat it as a company expense so gross of profits if that makes sense. Thats what i do anyway - and my oh also pays 243 from his company and the rest of the cost comes out of our household account.
I mentioned direct payment for directly contracted childcare as the first option.
But note that in order for the exemtion to apply the childcare must be provided by the company paying for it, it is NOT enough for the company to pay part of a bill for a parent contracting with a childcare provider or employing a nanny. If the company is inspected by HMRC they WILL impose a charge on this (based on tax at the employee's marginal rate, employee's and employer's national insurance) which will leave you with a big bill. Note that this means that it is almost impossible for two separate companies paying for the same childcare to be effective unless the childcare provider is happy to have different contracts for different days of the week. As the cost of vouchers is only £82 a year after tax (or if you really want to and the providers are willing the companies can set up voucher schemes of their own) I am surprised that anyone would take this risk.
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