You can pay up to £55 per week in childcare vouchers to employees (you) and not pay any national insurance or income tax but you can claim a business tax deduction.
If you receive a salary of about £7,500 your salary will be taxable at the basic rate (or covered by the personal allowance) you can claim the maximum £55 childcare voucher. That is a £2,860 per annum fully tax deductible by your company.
The small print:
- The scheme must be available to all employees so just you or 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 your childcare vouchers for?
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.
How do you implement a scheme?
You must complete some paperwork to hold in the company’s records on the employee and the child.
You must design a voucher that you can pass to your childcare provider. This voucher will be passed back to you for payment.
At Clearways Accountants we also recommend that you pass a board or shareholders resolution with an outline of the scheme.
HMRC guidance is available here childcare voucher schemes post FA 2011
The self employed 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.
If you would like to take advantage of the childcare voucher scheme but you are not sure where to start, then contact Clearways Accountants using the contact form below or by calling us on 01737 244298 and we can help you get your scheme up and running.