Paying childcare costs through company

[Clare@InTouch]

I pay direct to the nursery.

No point in child care vouchers for our little companies, I guess those are to make it more manageable for big companies, so they don't have to setup lots of standing order to lots of different nursery/child care providers.

They are useful if your child isn't in nursery yet as you can save them up to use later. It enables you to get the £55 a week voucher when you're not yet incurring the costs. You have to pay a voucher fee to the provider, but that would probably be less than the tax you'll save.

[kingcook]

Don't forget, once they turn 3 (+ a bit) they are entitled to 15 hours free per week anyway (15 hours = roughly 2 days).

https://www.gov.uk/free-early-education

[Jessica@WhiteFieldTax]

I pay direct to the nursery.

No point in child care vouchers for our little companies, I guess those are to make it more manageable for big companies, so they don't have to setup lots of standing order to lots of different nursery/child care providers.

Echo that

[scope]

I paid up to the maximum allow from company account and topped up from my personal account for the rest.. I wouldnt worry about the extra hassle for the nursery, if they want the money they'll have to accept it (and Im sure all will).

[TheCyclingProgrammer]

Quick update: with my partner as company secretary, our combined childcare allowance will cover the weekly costs so no worry about making separate payments.

Definitely want to go down the directly contracted route except every nursery we've spoken to has been confused by the idea of invoicing the company. Lots of talks about "not sure if our system can do that' or "we need to talk to our accounts department".

Somebody above said that it's not a deal-breaker and I've seen Nixon Williams recommend you send a letter of agreement from MyCo to the nursery but I still would have thought the invoice would have to be in the company name to be valid (otherwise surely it would look like the company is paying for my costs, which is non-allowable?).

[psychocandy]

In the past, have used salary sacrifice for childcare vouchers from wifes employment which has worked well. But on only £30/month this stockpiled quite a bit (our son got older and we just used it to pay for after-school club at £3 a time etc.

Now new baby childcare costs are £160/month (this is childminder two days per week). We've got a stockpile to use for a few months but its going to run out.

Must admit I didnt realise ltd could pay directly so this may be an option. Wife continues her £30 a month and we part-use this as well. Or even let this build up a bit to use when theres no money in the company pot.

One problem though may be that when I've got no contract, I issue myself a P45 and claim JSA. Thus not being an employee any longer I guess I could not provide myself a benefit of childcare during this time.

(Please lets not get into the JSA thing again).

Of course, no contract would mean I'd be home to do baby duties but, unfortunately, its not possible to cancel childminders and then restart when it suits.

One thing though. Wife is currently a director too but recieves no salary just dividends. I understand the £55/week allowance is per person. Does this mean I could provide her with the childcare benefit? Or would she need to be paid some form of salary?

I've always shied away from paying her a salary even for the small amount of admin work she does. Paying a family member a large salary for disproportionate amount of work is asking for trouble IMHO. Assuming providing an employee who does a few hours work two days of childcare per week would also be seen as such?

I see that a letter to childminder from ltd company is the way forward though to allow direct payments.

[TheFaQQer]

One thing though. Wife is currently a director too but recieves no salary just dividends. I understand the £55/week allowance is per person. Does this mean I could provide her with the childcare benefit? Or would she need to be paid some form of salary?

This seems to answer your question.

You could pay her £55 a week and then use salary sacrifice.

[FiveTimes]

Of course, no contract would mean I'd be home to do baby duties but, unfortunately, its not possible to cancel childminders and then restart when it suits.

When you are between contracts I would keep the baby in childcare. That way you can attend interviews at the drop of a hat without having to sort out cover.

Thats just my opinion but its worked for me in the past and only when the bench time gets long do I look at trimming the childcare costs.

[psychocandy]

When you are between contracts I would keep the baby in childcare. That way you can attend interviews at the drop of a hat without having to sort out cover.

Thats just my opinion but its worked for me in the past and only when the bench time gets long do I look at trimming the childcare costs.

Probably good idea like you say. And of course, good childminders are few and far between and if you can it chances are someone else will take the slot.

[TheCyclingProgrammer]

Seeing as psychocandy bumped this thread, I see that I didn't really update what I ended up doing in the end. I was able to get the nursery to agree for MyCo to sign the nursery agreement/contract and I signed it as company director which they were happy with. Their system still spits out monthly statements in our names but the nursery manager produces a separate invoice in the company name for the fees, so I'm satisfied that the arrangement is fine as is my accountant.

Don't forget you need to do the "basic earnings assessment" at the beginning of each tax year, showing the salary and benefits provided to each employee/officer you are providing childcare for and the maximum tax free childcare that is allowed. Its just paperwork but good to make sure everything is in order.