Reply to: Childcare - paying when not getting salary

[northernladyuk]

My assumption was based on the OPs other postings, not just the forum he's posted on

Based on the OP's other postings, he's a BAU service desk operative, who sometimes has to sign on to keep his head above water. Nothing wrong with that, so I'm not being judgmental. Just making sure we have the angles covered.

[northernladyuk]

I'm not confusing the two.

How do you define an employee? Is a company director without an employment contract an employee? If not, then most of us aren't employees and not eligible for childcare vouchers according to that logic.

This is what Kiddivouchers, one of the biggest childcare voucher providers, have to say:



https://www.kiddivouchers.com/pdfs/I...Businesses.pdf

Still waiting for SeanT (or anybody) to provide evidence that OP (assuming they are still a company director) wouldn't be eligible to the maximum of £243/month.

I'm just not sure why you raised employment contracts as if it had some relevance. Other than that I'm broadly in agreement with you.

[SeanT]

You may want to validate that assumption. Not all contractors are doing high value project-based work, and this is an inclusive forum that respects the whole range of contractor groups, no matter how lowly!

My assumption was based on the OPs other postings, not just the forum he's posted on

[SeanT]

I'm wrong. Fill your boots at £243

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

[SeanT]

This has become an epic ask your accountant thread, but anyway, imho:

I've never seen anything that would suggest an employment contract is necessary and how many contractors have an employment contract with their own Ltd anyway?

This is interesting: Contractors’ Questions: Do I need a contract with my limited company? :: Contractor UK

Therefore, if the only requirement to be considered an employee for childcare voucher purposes is that OP has a salary, then just pay a very minimal salary, sorted. But I can't find any official guidance that states a salary is necessary.

The vouchers are part of the salary. The childcare payments are the minimal salary. Again, directors only (as minimum wage exempt).

Also, as any salary would be nominal, OP would be entitled to the maximum childcare voucher benefit of £243/month as their relevant earnings (which do not include employment income from other employments, including their umbrella co) would be below the higher rate threshold.

I'm under the impression this works like savings interest and you'd have to BIK the difference once you found out you were going to be higher rate / when you did your tax return.

[TheCyclingProgrammer]

Don't confuse having an employment contract (do you mean a written contract?) with being an employee.

I'm not confusing the two.

How do you define an employee? Is a company director without an employment contract an employee? If not, then most of us aren't employees and not eligible for childcare vouchers according to that logic.

This is what Kiddivouchers, one of the biggest childcare voucher providers, have to say:

Does a director need to receive a salary to take part?
Directors can receive childcare vouchers in addition to salary even if they are not drawing any salary. The childcare vouchers are simply a tax-free employee benefit which can be provided regardless of salary.

https://www.kiddivouchers.com/pdfs/I...Businesses.pdf

Still waiting for SeanT (or anybody) to provide evidence that OP (assuming they are still a company director) wouldn't be eligible to the maximum of £243/month.

[northernladyuk]

I've never seen anything that would suggest an employment contract is necessary and how many contractors have an employment contract with their own Ltd anyway?

Therefore, if the only requirement to be considered an employee for childcare voucher purposes is that OP has a salary, then just pay a very minimal salary, sorted.

Also, as the salary would be nominal, OP would be entitled to the maximum childcare voucher benefit of £243/month as their relevant earnings (which do not include employment income from other employments, including their umbrella co) would be below the higher rate threshold.

Don't confuse having an employment contract (do you mean a written contract?) with being an employee.

Anyway, the OP may find this helpful.

http://www.gov.uk/childcare-vouchers...off-calculator

[TheCyclingProgrammer]

I would think the question is not whether he is a director but whether he is an employee, when he is doing no billable work via the Ltd, and it is possible (needs clarifying) that he may have sacked himself so he can sign on for a couple of weeks before taking on the Umbrella contract.

I've never seen anything that would suggest an employment contract is necessary and how many contractors have an employment contract with their own Ltd anyway?

Therefore, if the only requirement to be considered an employee for childcare voucher purposes is that OP has a salary, then just pay a very minimal salary, sorted. But I can't find any official guidance that states a salary is necessary.

Also, as any salary would be nominal, OP would be entitled to the maximum childcare voucher benefit of £243/month as their relevant earnings (which do not include employment income from other employments, including their umbrella co) would be below the higher rate threshold.

[northernladyuk]

As previously, I'm assuming this umbrella contract is lucrative enough to make him ineligible for any of those (even on a moderate perm salary I lost all my tax credits 6-7 years ago).

You may want to validate that assumption. Not all contractors are doing high value project-based work, and this is an inclusive forum that respects the whole range of contractor groups, no matter how lowly!

[SeanT]

As previously, I'm assuming this umbrella contract is lucrative enough to make him ineligible for any of those (even on a moderate perm salary I lost all my tax credits 6-7 years ago).

[northernladyuk]

Surely, even if he has sacked himself, he can just hire himself again!

But the childcare will count as salary and will probably impact any working tax credit payments associated with the umbrella contract.

[SeanT]

Surely, even if he has sacked himself, he can just hire himself again!

[northernladyuk]

I do know how the rules around childcare payments work. If OP is still a director of his company, I'm asking why couldn't he receive childcare payments? AFAIK there isn't a minimum salary requirement.

I would think the question is not whether he is a director but whether he is an employee, when he is doing no billable work via the Ltd, and it is possible (needs clarifying) that he may have sacked himself so he can sign on for a couple of weeks before taking on the Umbrella contract.

[TheCyclingProgrammer]

All well and good to ask accountant. BUT, as we keep harping on its your company and its always best to understand the rules yourself as well.

I do know how the rules around childcare payments work. If OP is still a director of his company, I'm asking why couldn't he receive childcare payments? AFAIK there isn't a minimum salary requirement.

[SeanT]

So much advice is given around if you're married and your other half doesn't work, whereas I had to do my own calculations to optimise stuff for a partner who already has a "normal job" Someone did post a calculator that took it into account the other day, but it was a couple of years out of date.