Paying childcare costs through company

[macray76]

I suppose my biggest query is what happens with unspent childcare vouchers at the end of the financial year?

As an individual I have until the children reach 16 years old to spend them but for my company I would need to show a liability on the balance sheet to show I have an obligation to pay these in future months/years.

Maybe I'm just over thinking this and in the end it isn't saving me a whole lot in the long run.

[Lurker101]

I suppose my biggest query is what happens with unspent childcare vouchers at the end of the financial year?

As an individual I have until the children reach 16 years old to spend them but for my company I would need to show a liability on the balance sheet to show I have an obligation to pay these in future months/years.

Maybe I'm just over thinking this and in the end it isn't saving me a whole lot in the long run.

I do not accumulate vouchers, I spend up the allowed limit and any underspend is lost. It is worth doing as it is tax free money.

[macray76]

I do not accumulate vouchers, I spend up the allowed limit and any underspend is lost. It is worth doing as it is tax free money.

I think I'll stick with directly contracting with the provider and accept losing any underspend each company financial year.

Thanks all for the advice!

[tarbera]

London Childcare Costs

Bright Horizon - a big Chain

Monthly Fee, for 1 Child under 3

2 days a week = £731
3 Days a week = £1033
4 Days a week = £1237
5 days a week = £1461

over 3 year olds come down £10 a week

[mickael28]

I've gone through the thread and see that most people recommend paying the childcare as a business expense directly from the company.

I talked to my accountant and he mentioned that the savings of using salary sacrifice instead would be larger than those of the corporation tax of the company, as one would save tax and NI (20% + 12%) vs the CT at 19%.

I was wondering, why do people usually use the business expenses route if the savings could be slightly higher via salary sacrifice?

[MrButton]

I've gone through the thread and see that most people recommend paying the childcare as a business expense directly from the company.

I talked to my accountant and he mentioned that the savings of using salary sacrifice instead would be larger than those of the corporation tax of the company, as one would save tax and NI (20% + 12%) vs the CT at 19%.

I was wondering, why do people usually use the business expenses route if the savings could be slightly higher via salary sacrifice?

I assume as most on here will be on the low salary high dividend model.

So their salary won’t require income tax or NI. Just dividend tax.

I maybe wrong in this.

[TheCyclingProgrammer]

There’s no point in taking a salary sacrifice if your salary is already below the income tax threshold.

[northernladuk]

I've gone through the thread and see that most people recommend paying the childcare as a business expense directly from the company.

I talked to my accountant and he mentioned that the savings of using salary sacrifice instead would be larger than those of the corporation tax of the company, as one would save tax and NI (20% + 12%) vs the CT at 19%.

I was wondering, why do people usually use the business expenses route if the savings could be slightly higher via salary sacrifice?

Might be worth passing your setup passed a Contractor specific one for a second opinion to make sure your accountant has you set up properly.

[DolanContractorGroup]

Childcare

There’s no point in taking a salary sacrifice if your salary is already below the income tax threshold.

I agree with this! No saving if your salary is below the income tax threshold. In my opinion you would want to look at Childcare vouchers but need to get this in place before the 5th April 2018 before the tax free childcare comes into effect.

[mickael28]

We dont' currently have any childcare expenses, but we'd like to join the scheme before it ends. We were thinking about managing our own childcare vouchers rather than going to an external provider.

I was thinking about using the business expenses option, pay the a specific monthly amount from the standard business account to another business account we've got set-up just for this, issue ourselves with the relevant vouchers and use those ones in the future. So that we could paid them from the 2nd business account.

Our accountant has told us that for doing so the only option is via salary sacrifice. One could not just manage vouchers in-house when using the business expenses route.

Guys, I just wanted to confirm if that's your understanding as well? so that we can just go via the salary scrificy route in this scenario...