child care vouchers and accountant

[legal]

Started contract before 2 months.

My accountant did not suggest but I read here that we can pay child care through limited company. Foreach employee, £243. I have got two questions:

1. Is the amount tax free?
2. Why did accountant did not suggest this from his/her side? Isn't it their responsibility to make optimum tax structure for me?

Thanks

[northernladuk]

Unfortuantely we all assume is it the accountants job to advise us on the best way to save money but this is far from the reality. For the price we pay they cannot spend time looking in to our personal sitations and running our businesses for us. We have to do the lions share and understand the finances around it. I have found at best they will offer information for us to digest and then will answer questions based on what we found, at worst they don't lift a finger to help.

It is your business and your money, it is up to you to understand it and make the best of it I am afraid.

Regarding childcare here are some links from the search that might help as it has been covered a number of times...

http://forums.contractoruk.com/accou...-benefits.html

http://forums.contractoruk.com/accou...sport-fee.html

http://forums.contractoruk.com/accou...e-voucher.html

[MarillionFan]

Started contract before 2 months.

My accountant did not suggest but I read here that we can pay child care through limited company. Foreach employee, £243. I have got two questions:

1. Is the amount tax free?
2. Why did accountant did not suggest this from his/her side? Isn't it their responsibility to make optimum tax structure for me?

Thanks

You have to request to use child care vouchers. It is effectively a salary sacrafice scheme. There would be a
cost for setting it up and maintaining it so your accountant could charge more. In addition most contractors pay a salary of say £6k so we don't really pay tax. The rest upto around 40k total is made of dividends to whit we pay Corp tax. After that you start to pay more tax.

Having looked into it I decided it was too much hassle.

[MarillionFan]

And to NLs point about accountants. You need to get a new one. Mine sends me a quarterly newsletter they do
about tax changes, will see be within a few days notice and always suggests ways to increase my takehome.

[northernladuk]

And to NLs point about accountants. You need to get a new one. Mine sends me a quarterly newsletter they do
about tax changes, will see be within a few days notice and always suggests ways to increase my takehome.

SJD do the same, more than quaterly but these are just generic posts to all. The last few were about home office costs and company phones. What they will not do is target you as an individual and say 'Ah Mr Legal, you have children I see, how about do this'

[legal]

You have to request to use child care vouchers. It is effectively a salary sacrafice scheme. There would be a
cost for setting it up and maintaining it so your accountant could charge more. In addition most contractors pay a salary of say £6k so we don't really pay tax. The rest upto around 40k total is made of dividends to whit we pay Corp tax. After that you start to pay more tax.

Having looked into it I decided it was too much hassle.

Many thanks for your reply. Just want to make clear about 40k. Is it basic salary + dividends = 40k or do you mean basic salary + 40k (dividends etc) = Total take home?

[Clare@InTouch]

You can just pay childcare direct from the company to the childcare provider, you don't need to have actual vouchers. Per HMRC:

Commercial childcare and childminders - to 5 April 2011

You provide childcare support to your employees by contracting directly with a childcare provider - such as a commercial nursery or a childminder.
What to report, what to pay - up to £55 per week (£243 per month)
The first £55 per week is exempt from tax and NICs for all employees and doesn't need to be reported to HMRC, provided all the following conditions are met:

• the childcare has the appropriate registrations and approvals
• the childcare is available to all of your employees
• the children cared for are your employees' children, or children for whom your employees have parental responsibility
• the childcare covers up to the end of the week containing 1 September following each child's 15th birthday (16th birthday for children with a disability)

For company directors and employees earning at a rate of £8,500 or more per year:
report the amount above £55 on form P11D - section M and pay Class 1A NICs on the amount above £55 per week

http://www.hmrc.gov.uk/paye/exb/a-z/c/childcare.htm


Keep in mind that if you get tax credits then childcare payments could affect them. HMRC have a Better Off Calculator here: HM Revenue & Customs: Childcare vouchers and tax credits - better off calculator

Also, if you're a higher rate or additional rate taxpayer then the amount you can claim, if you're not already in a scheme, is less. Childcare Vouchers: Cut childcare costs by £1,000/year...

[Lumiere]

You don't have to use a voucher provider and you can pay it on top of the salary tax free if up to £243 pcm per employee (if you wife is also PAYEd as a company secretary you can get £486 pcm tax and NI free).

Just make you sure that you pay direct ltd->provider, you have their reg num and, ideally, you get contract/invoices on company name.