Reply to: Tax free childcare - £55 a week or £243 a month?

[psychocandy]

She receives a small salary for admin work. I'm not an employee either, I'm a director. We are both on the payroll and entitled to childcare.

Ah yes. I see. Yes my understanding was you had to be drawing a salary to be elligible.

[TheCyclingProgrammer]

But not an employee? Are you sure? I think shes got to be an employee....

She receives a small salary for admin work. I'm not an employee either, I'm a director. We are both on the payroll and entitled to childcare.

[psychocandy]

Now, I had always worked on the assumption of annual allowance, albeit aware of the £55/week or £243/month......so figured up to £2,915 (53*55) or £2,916 (243*12) per year.

However, my accountant recently told me not to pay over £243 in a month....I was told that, as some months I pay over £243 and other months we use wifety's employers vouchers, that HMRC do not work to an annual amount and I was best suited never going over £243 in a given month

Interesting. Looks like a few of us have been told it can be used pro-rata and is NOT a limit though. Wonder whos right.

Either way, its unlikely ever to come to light unless hmrc investigate.

[psychocandy]

Yes, I did this for the same reason, but the one advantage of childcare vouchers is that you can save them up, which could be useful 2 or 3 years down the line. I'd be concerned about how long they remain valid for though under these new changes.

My wife is company secretary so we can both get vouchers for a combined allowance.

But not an employee? Are you sure? I think shes got to be an employee....

[TheCyclingProgrammer]

There's an overview of the new changes in 2017 here:
Childcare vouchers: save £1,000/year - MoneySavingExpert

[TheCyclingProgrammer]

Now, I had always worked on the assumption of annual allowance, albeit aware of the £55/week or £243/month......so figured up to £2,915 (53*55) or £2,916 (243*12) per year.

However, my accountant recently told me not to pay over £243 in a month....I was told that, as some months I pay over £243 and other months we use wifety's employers vouchers, that HMRC do not work to an annual amount and I was best suited never going over £243 in a given month

This document outlining the most recent changes to employee childcare payments specifically states the allowance as either weekly, monthly OR annually:

https://www.gov.uk/government/upload...mployer-qa.pdf

The annual allowance is £2915.

Not sure if his is pro-rata or not though. And I can't find any other references other than that document (the gov.uk site only mentions weekly or monthly). So it might be prudent to follow your accountants advice on this one unless you can get confirmation from HMRC that you can apply the allowance annually.

[kevpuk]

Now, I had always worked on the assumption of annual allowance, albeit aware of the £55/week or £243/month......so figured up to £2,915 (53*55) or £2,916 (243*12) per year.

However, my accountant recently told me not to pay over £243 in a month....I was told that, as some months I pay over £243 and other months we use wifety's employers vouchers, that HMRC do not work to an annual amount and I was best suited never going over £243 in a given month

[TheCyclingProgrammer]

I pay directly from ltd co. Trouble is with vouchers theres usually an admin charge to do this and so it costs more.

And of course, as someone said, once you've got them, you've got them - no refunds. I just do a bank transfer to childcare provider from ltd once per month.

Yes, I did this for the same reason, but the one advantage of childcare vouchers is that you can save them up, which could be useful 2 or 3 years down the line. I'd be concerned about how long they remain valid for though under these new changes.

My wife is company secretary so we can both get vouchers for a combined allowance.

[ContrataxLtd]

Hi Martin, I previously arranged to pay my daughter's nursery directly from MyCo so I've never been part of a childcare voucher scheme. It sounds like it might be worth doing it sooner rather than later though. I'll have a word with my accountant about it. Thanks.

Yes having a word with your accountant would be a good move, you could make a decent saving by getting some vouchers in early assuming you know you can use them all.

If you run the scheme yourself you save the admin fees but it is a bit more hassle (speaking from experience).

Let me know if you need any more guidance on this.

Martin
Contratax Ltd

[psychocandy]

Hi Martin, I previously arranged to pay my daughter's nursery directly from MyCo so I've never been part of a childcare voucher scheme. It sounds like it might be worth doing it sooner rather than later though. I'll have a word with my accountant about it. Thanks.

I pay directly from ltd co. Trouble is with vouchers theres usually an admin charge to do this and so it costs more.

And of course, as someone said, once you've got them, you've got them - no refunds. I just do a bank transfer to childcare provider from ltd once per month.

Wife can get childcare vouchers. Of course, then theres no extra cost to her (employer sucks this one up). BUT, in her case, she doesn't earn enough (works part-time) to pay tax or NI so its pointless - doesnt save anything.

(although she pays NHS pension at 7.1% so it may be saving her that - not sure how this works).

Of course, with me paying, its money that would otherwise be profits and subject to 20% CT. More next year :-(

[psychocandy]

there's probably a line of reason somewhere in the middle (i.e. maybe you can fluctuate across all 12 months but i suspect you wouldn't be able to claim £2916 across three months and nothing for nine months, which was effectively my question as my daughter started nursery part way through the tax year)

Yes I guess that is slightly different. In my case, it might be £300 one month, £200 the next - so it just averages out at £250 say.

[TheCyclingProgrammer]

Hi TCP

Yes childcare vouchers will be changing but off the top of my head I can't remember when from, either early 2016 or 2017 I think but don't quote me on that.

If you are currently in a voucher scheme you can continue in the scheme if you wish so you might want to start issuing vouchers now so they can be used when the little one arrives. Don't buy too many though because generally they are non refundable.

Martin
Contratax Ltd

Hi Martin, I previously arranged to pay my daughter's nursery directly from MyCo so I've never been part of a childcare voucher scheme. It sounds like it might be worth doing it sooner rather than later though. I'll have a word with my accountant about it. Thanks.

[ContrataxLtd]

Did I read somewhere that childcare payments are changing from next year? Our daughter has started school now but we have another on the way and would like to start planning ahead.

Hi TCP

Yes childcare vouchers will be changing but off the top of my head I can't remember when from, either early 2016 or 2017 I think but don't quote me on that.

If you are currently in a voucher scheme you can continue in the scheme if you wish so you might want to start issuing vouchers now so they can be used when the little one arrives. Don't buy too many though because generally they are non refundable.

Martin
Contratax Ltd

[TheCyclingProgrammer]

Did I read somewhere that childcare payments are changing from next year? Our daughter has started school now but we have another on the way and would like to start planning ahead.

[ContrataxLtd]

You can issue the vouchers to yourself too, you don't need to use one of the voucher schemes which can save a few %. Although personally, I think the use of the voucher schemes is a good idea as it takes all the hassle out of arranging the payments with the childcare provider when they reclaim the voucher from your Co and they are less likely to get confused if you are using one of the 'main' voucher providers.

The upside with vouchers is you can start as soon as the child is born too and 'stockpile' the vouchers for future use.

Martin
Contratax Ltd