Ltd Company Paying nursery fees

[fromdownwest]

Hi all, I have received conflicting information on paying for childcare through my own company, Ltd.

Ignoring the child care voucher purchasing, I have had one accountant confirm that I am able to have the Nursery invoice my Ltd company directly and then the Ltd company settles up, as an allowable expense, not having to take this as dividend income or it be treated as a benefit in kind.

I assume there are some limits to this. Is it per the director?

If anyone has some real-life experience then that would be most helpful.

Many thanks

Unless you're providing childcare as part of your services I can't see how you could NOT treat it as benefit in kind?? I'm not an accountant but I've ran a Ltd company for 9 years and I'm pretty sure HMRC would treat this with a very dim view!

We did it. Childcare as a valid business expense. No benefit in kind impact.

I am a CA in practice.
childcare is not a business expense. This will generate a BIK.
The childcare vouchers and childcare arranged via employer arrangements made directly with a provider are no longer available. they have been replaced by Tax-Free Childcare

Thank you, what would be the most tax efficient way to pay for childcare then? Take as salary and purchase vouchers for the 20% relief.

Either Tax Free Childcare scheme (with an provider and there are other qualifying conditions eg earnings). Or salary sacrifice arrangement if the nursery will invoice the company, and therefore pay BIK.

Which is more tax efficient for you depends on your circumstances. Salary sacrifice can work better if HR tax payer.

Be wary of your accountant. Both because of the no BIK suggestion but also because a BIK cost is not automatically deductible for CT. The question is whether the benefit is being provided as part of the employee's remuneration package. Rather than the company settling the directors liabilities (which become repayable and subject to s455)