Did you realise you can pay up to £55 per week in childcare vouchers to employees and not pay any national insurance or income tax but you can claim a business tax deduction?
If you are maximising efficiency when you extract funds from your own company and therefore taking a salary taxable at the basic rate only then you will be able to claim the maximum £55 childcare voucher.
There are some rules and regulations:
- The scheme must be available to all employees so if you are operating a husband and wife company and both of you are employees or directors then both of you could claim £55 per week; that’s a total of £5,720 this year;
- The vouchers can only be issued for children that your employees have responsibility for; and
- The voucher can cover childcare up to the end of the week containing 1st September following the child’s 15th birthday (or 16th birthday if the child has a disability)
What can you use the vouchers on? Any registered childcare provision will qualify, so school fees are the obvious option but potentially you could use the vouchers for payments to the local scout or guide group or for weekend drama groups.
In order to make the scheme work you must provide a voucher to the registered childcare provider and this provider must redeem the voucher with the business.
Sole traders and partners cannot use the scheme; it is only open to employees and officers but a sole trader who employs a spouse as a bookkeeper could use the scheme for that employee.