Childcare Vouchers for Ltd Company

[johnsmith]

quite new to all this, hope someone will be able to help

i'm the only director of a Ltd Company, my wife is the Secretary. we are the only 2 employers of the Ltd Company so far.

We have a a daughter planning to send her to nursery soon. thinking abt getting the childcare vouchers to pay for part of her nursery fees.

Now the questions is

i have heard abt companies doing vouchers for small Ltd Companies.Can I get vouchers in my name as well as my wife's name and pay for our only daughters nursery fees?

Also I have read each employee is entitled for around £55/week as childcare vouchers- does that get deducted from the salary each week- not sure how that works?

anyone who has encountered a similar thing- pls kindly share some info

thanks for taking the time to read this post - any suggestions welcome

 

[MrPAYE]

If you are both employed by the company (as opposed to just being shareholders) you would both be entitled to £55 per week of vouchers each tax/NI free.

This is usually done via salary sacrifice whereby the salary is reduced and the employer pays an equivalent amount in vouchers but as it is is your own company there is no need to do it that way as you can continue with your current salary arrangements and just get the company to pay for the vouchers over and above this.

The main thing for you is that the company and not you personally pays for the vouchers.

Hope this helps.

Mr P

 

[frauke]

You can create your own vouchers. It is very easy to do, if you only have a few to do!

 

[malcolmcoles]

Look at the comments on this accountingweb post, and you can see how to do it yourself (which is what I do - am in similar position to yourself).

If you do go down the voucher company route (and there really isn't much point), I did a phone round to discover the costs of the different childcare voucher companies.

But I just got the limited company to contract directly with the childcare provider and it works fine.

 

[johnsmith]

frauke and malcolmcoles - thanks for the reply and links.

i have read through the links provided. have another question now

is it possible for just paying the childcare provider - by direct debit from the personal account and then take it out as an expense from the Companies Bus. Acoount. i guess this would be what the voucher compnay be doing, so why can't we just do that.


or is it more complex than what i think

pls advice

 

[malcolmcoles]

I think you absolutely can't do that. It can't look like the company is just paying one of your bills. The company has to have a direct business relationship with the childcare provider. Otherwise you could just avoid tax by getting the company to pay your paper bill, gas bill, supermarket bill etc.

 

[MrPAYE]

I think you absolutely can't do that. It can't look like the company is just paying one of your bills. The company has to have a direct business relationship with the childcare provider. Otherwise you could just avoid tax by getting the company to pay your paper bill, gas bill, supermarket bill etc.

This is correct.

Tax relief is only available for 'employer provided' childcare. You paying personally and then being reimbursed by the company is settlement of a personal liability and therefore subject to PAYE and employer/employee NI in full.

 

[johnsmith]

what abt when the company pays the childcare provider by Direct Debit- will that be cnsider legal then?

 

[taxattack]

what abt when the company pays the childcare provider by Direct Debit- will that be cnsider legal then?

The point is that the employer contracts with the childcare provider. Otherwise, as has been said, the employer is meeting the employee's "pecuniary liability", and the tax exemption is lost.

Take a look at look at http://www.hmrc.gov.uk/childcare/smechildcareguide.pdf

Edit: don't forget that working tax credit can pay for some childcare, so it's worth checking whether it is best for the company to pay.

Chris

 

[malcolmcoles]

John - the way to do this is to put on your limited company hat and ring up the childcare provider saying you're XYZ Ltd and would like to purchase £55 a week's childcare. They'll send you something to sign - sign it and arrange to pay the bill via the company's bank account.

Then ring up as yourself and buy the rest of the childcare you need personally, using your personal bank account. You'll need to sign something else as yourself.

You can probably do all this in one phone call - but the crucial thing is that you need TWO agreements. The company has to buy some childcare, and you have to buy some.

 

[johnsmith]

thanks malcolmcoles,

I may not need any personal hours. I could use my plus my spouses( who's the Comp. Sec.) and use 243+ 243= 486/ month as we are only sending our daughter for a couple of hours for a start.

So from what you have mentioned, I could put on the Director of the Company hat and ring the childcare provider and arrange an agreement for the 2 employees ( but 1 child) - is that right

 

[malcolmcoles]

Oh well, even simpler then. Yes, as you say - stick your company hat on, and get the company to buy some childcare.

 

[johnsmith]

any idea what i shd include in a childcare request letter.

i understand it would look more official to have it in the company letter head and have the employees names and the child's name with D.O.B

anything else anyone can suggest
thanks in advance

 

[malcolmcoles]

I'm sure the nursery will have a standard contract - so you just need to sign that and return it, perhaps with a covering letter as you suggest.