Childcare Vouchers - HELP!

[SimonMac]

Trying to setup childcare vouchers for my son's nursery, but getting really confused with that I need to do, especially around telling HMRC about the salary sacrifice, proof on contracts etc. I am not a director of my company of my so am subject to minimum wage etc so that adds another complication.

Can someone give me assistance in what I need to tell HMRC in terms of a voucher scheme?

[northernladuk]

I can't believe one of our more experienced and revered posters would but HELP! in the title of their thread!!

[Clare@InTouch]

Nothing. Just pay up to £55 a week from your limited company direct to the registered childcare provider (ie. not your Mum if she's babysitting!). You cannot reclaim on expenses, and the amount you can pay is lower if your income (excluding dividends) puts you into higher rates or additional rates of tax. Simples

[northernladuk]

Nothing. Just pay up to £55 a week from your limited company direct to the registered childcare provider (ie. not your Mum if she's babysitting!). You cannot reclaim on expenses, and the amount you can pay is lower if your income (excluding dividends) puts you into higher rates or additional rates of tax. Simple!

See what she did there SM. She called you simple. These financial types calling their customers names is rampant. Don't stand for any of that nonsense!

[SimonMac]

Nothing. Just pay up to £55 a week from your limited company direct to the registered childcare provider (ie. not your Mum if she's babysitting!). You cannot reclaim on expenses, and the amount you can pay is lower if your income (excluding dividends) puts you into higher rates or additional rates of tax. Simples

See now thats what I thought was the situation, but am being asked for contracts etc etc

[SimonMac]

See what she did there SM. She called you simple. These financial types calling their customers names is rampant. Don't stand for any of that nonsense!

Its ok I am sat on the sofa so not standing.

[Jeremiah@RHJAccountants]

I agree with the above very simple and nothing to panic over.

Make sure you notify your accountant if they run the payroll for you.

[Clare@InTouch]

See what she did there SM. She called you simple. These financial types calling their customers names is rampant. Don't stand for any of that nonsense!

[SimonMac]

Thanks for the advice, I was following this specifically

The employer should provide full details of the scheme and of the new contractual arrangements

So was trying to get my head around what contract I will need in terms of hours worked to meet the NMW but also still take a low salary

[IR35 Avoider]

I have not read the linked HMRC document, but surely the situation is simple: you pay yourself whatever salary you were going to any way, and pay the childcare on top of that. Then the issue of salary sacrifice does not arise.

You only need salary sacrifice if the money to pay the childcare can't be take from money that would have been dividends, retained earnings or pension contributions. If you were already taking all contract income as salary and you're having problems meeting minimum wage then something's not right...

Something I read earlier this week is that the employer does need to assess which tax band you fall in (which governs how much you can get tax-free) at the start of each tax-year and keep a record of that assessment. You are legally required to have that record in order to be entititled to relief. I think the phrase HMRC use is something like "basic earnings assessment."

Edit: here we are

What are the qualifying conditions?
The legislation sets out a number of conditions that have to be met in order for the tax relief to apply. These are:
A. the childcare voucher or directly-contracted childcare relates to care for a child who –
(a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense, or
(b) is resident with the employee and is a person in respect of whom the employee has parental responsibility.
B. the care must be qualifying child care.
C. the scheme must be open –
(a) to the employer’s employees generally, or
(b) generally to those at a specific location,
(but where the scheme is provided through salary sacrifice or flexible remuneration arrangements, this condition will still be met if the scheme is not available to employees with earnings at or near the National Minimum Wage).
D. for employees joining schemes on or after 6th April 2011 that an estimate of the employee’s relevant earnings amount for the tax year must have been made at the required time.

When do employers have to carry out the basic earnings assessment?
If you join your employer’s scheme on or after 6th April 2011, your employer should carry out a basic earnings assessment when you first join the scheme and then annually at the start of the subsequent tax year. The assessment remains valid for the whole of the relevant tax year.
The annual assessment cannot be deferred until later in the year when final information on taxable benefits provided to you is reported by your employer on a Form P11D. It is an assessment made on the basis of information available at the start of the tax year or when you join the scheme.
If your employer does not carry out a basic earnings assessment, you will not be entitled to any tax relief on the childcare support you receive.

http://www.hmrc.gov.uk/thelibrary/employee-qa.pdf