Employ partner - can I offer childcare vouchers

[steven123]

Hi,
I employ my partner part time. Is it possible for me to offer her childcare vouchers to use for approved childcare for our child?

I am a sole trader and my wife is my only employee.

 

[MartBrooks]

Do you pay her via PAYE? If so, and if her earnings would be above mininum wage _after_ the voucher has been taken out then, as I understand it, yes.

It's quite simple to set up, there are plenty of companies you can run the scheme through. The costs are not high.

 

[Abacus Accountants]

As previously mentioned, if your partner is on the payroll you can do it but you don't need to use a company to set up a scheme on this scale. Just follow the HMRC guidance here http://www.hmrc.gov.uk/childcare/childcarefactsheet.htm.

Beware of the possible effect on the childcare element of working tax credits. It is likely that you would be worse off by using childcare vouchers.

Regards

Andrew

 

[steven123]

Do you pay her via PAYE? If so, and if her earnings would be above mininum wage _after_ the voucher has been taken out then, as I understand it, yes.

Yes it would be PAYE and payment would be above minimum wage

 

[steven123]

Beware of the possible effect on the childcare element of working tax credits. It is likely that you would be worse off by using childcare vouchers.

Regards

Andrew

Thanks for this, I would be proposing to offer vouchers without reducing pay (hence reducing my taxable income) so upon reading guidance would suggest will result in my wife being better off.

 

[KiddiVouchers]

Hi there

It's correct that you can offer childcare vouchers to your partner as a benefit in addition to salary or alternatively via salary sacrifice. However, if you do receive help towards childcare costs through the tax credit system, it's definitely worth you checking the effect of childcare vouchers before starting a scheme.

Regardless of how the childcare vouchers are provided, HMRC will treat them as if your partner's employer is paying for childcare. This means you will no longer be able to claim tax credits in respect of this part of your childcare costs.

If tax credits aren't an issue for you and if your childcare costs are more than £243 a month, you might like to consider setting yourself up as a limited company so that both you and your partner can use childcare vouchers. Of course, there are other implications to incorporation but it's just something to bear in mind.

Hope that helps,

Alison