Reply to: Childcare Vouchers - HELP!

[THEPUMA]

Re documentation, if the company pays the carer directly, you have to be able to show that the contract was between the employer and carer, rather than the employer settling a personal liability of the parent, which would not qualify for the exemption.

There is a template letter from employer to carer which HMRC published. I can't find it online but have a copy if anyone wants me to email it to them. If anyone knows how to upload it somewhere that everyone can see, please feel free.

My email address is [email protected].

[Nathan SJD Accountancy]

[QUOTE=Peter999;1584172]

Hope SimonMac doesn't mind me posting on his thread but I'm facing a similar situation and would just appreciate some confirmation that what i'm doing is ok.

As director of my Ltd I pay myself a minimum salary, and any extra i take as dividends
I pay part of my sons nursery fees direct from my Ltd company account to the sum of £243/month and receive an invoice for said amount from nursery.(which from what i understand is the maximum permissible amount before having to declare it a BIK) and my wife pays the remainder of the balance also as vouchers from her PAYE part time job""

I have started doing the same for myself as a director. Can I also do it for my secretary?

Pay her minimum wage (£6.08*5 hours per week) £1,580.80 per annum, she also have other source of income.
PAYE tax at 20% relating her Wage - £316.16 and pay £243/month directly to nursery.

Total payments from company 2 x 243/month.

Not if this is fully acceptable and how much saving can achieve by doing this, less divided etc.

I would appreciate any comments.

Cheers

Peter

Hi Peter,

Yes it's fine to provide the Childcare to your Secretary provided the following conditions are met:

It is for either a child or stepchild of the Secretary who is maintained wholly or partly at the expense of the Secretary, and that the child is resident with the Secretary and is a person of whom the Secretary has parental responsibility.

The care must be qualifying childcare.

The scheme is open to all employees.

Due to the amount of income that your secretary receives though, this would have to be an ‘addition to salary cost’ to your company just as yours appears to be.

Why would you want to do this though? The total cost of the childcare cost exceeds the yearly income that they are receiving from your company. Your company would therefore be paying out more in childcare costs than the salary that they receive.

I am assuming you are connected to the Secretary in some way?

More details on this can be found on the below HMRC link.

http://www.hmrc.gov.uk/thelibrary/employer-qa.pdf

[Peter999]

Vauchers secretary

[QUOTE=Fandango;1544432]Hope SimonMac doesn't mind me posting on his thread but I'm facing a similar situation and would just appreciate some confirmation that what i'm doing is ok.

As director of my Ltd I pay myself a minimum salary, and any extra i take as dividends
I pay part of my sons nursery fees direct from my Ltd company account to the sum of £243/month and receive an invoice for said amount from nursery.(which from what i understand is the maximum permissible amount before having to declare it a BIK) and my wife pays the remainder of the balance also as vouchers from her PAYE part time job""

I have started doing the same for myself as a director. Can I also do it for my secretary?

Pay her minimum wage (£6.08*5 hours per week) £1,580.80 per annum, she also have other source of income.
PAYE tax at 20% relating her Wage - £316.16 and pay £243/month directly to nursery.

Total payments from company 2 x 243/month.

Not if this is fully acceptable and how much saving can achieve by doing this, less divided etc.

I would appreciate any comments.

Cheers

Peter

[Clare@InTouch]

sorry one last question

how does should this be accounted for in the books? Does it just get put under a nominal just like an ordinary company expense (I'm using Sage Instant) or does something funky need to happen with it?

thanks

Just put under a normal expense nominal. Makes sense to add it to the same group as wages, so something like "Other staff costs".

[Fandango]

sorry one last question

how does should this be accounted for in the books? Does it just get put under a nominal just like an ordinary company expense (I'm using Sage Instant) or does something funky need to happen with it?

thanks

[Fandango]

No, No and No.

thank you very much

[Clare@InTouch]

do i need to do anythign with HMRC to register that the Ltd company is operating a voucher scheme?

does it need including on p11d if its under the £243/month?

does it affect anythign on the p35?

No, No and No.

[SimonMac]

Hope SimonMac doesn't mind me posting on his thread but I'm facing a similar situation and would just appreciate some confirmation that what i'm doing is ok.

I just want to double double check i don't need to do anythign with HMRC (as i've spent about 1.30hr on hold trying to get through to them over the past week on the employer helpline )

As director of my Ltd I pay myself a minimum salary, and any extra i take as dividends

I pay part of my sons nursery fees direct from my Ltd company account to the sum of £243/month and receive an invoice for said amount from nursery.(which from what i understand is the maximum permisssable amount before having to declare it a BIK) and my wife pays the remainder of the balance also as vouchers from her PAYE part time job

My question is, do i need to do anythign with HMRC to register that the Ltd company is operating a voucher scheme?

I have a lady who does my payrol and an accountant and neither seem sure what i need to do about this (which doesn't inspire me with confidence tbh!) ie does it need including on p11d if its under the £243/month? does it affect anythign on the p35?

Thanks in advance

I haven't done anything with HMRC, as for the upper limit of £55/pw this is a absolute limit, not a BIK limit so you can't go higher than this. As for the P11D and P35, I got a year to work that one out myself

[Fandango]

Hope SimonMac doesn't mind me posting on his thread but I'm facing a similar situation and would just appreciate some confirmation that what i'm doing is ok.

I just want to double double check i don't need to do anythign with HMRC (as i've spent about 1.30hr on hold trying to get through to them over the past week on the employer helpline )

As director of my Ltd I pay myself a minimum salary, and any extra i take as dividends

I pay part of my sons nursery fees direct from my Ltd company account to the sum of £243/month and receive an invoice for said amount from nursery.(which from what i understand is the maximum permisssable amount before having to declare it a BIK) and my wife pays the remainder of the balance also as vouchers from her PAYE part time job

My question is, do i need to do anythign with HMRC to register that the Ltd company is operating a voucher scheme?

I have a lady who does my payrol and an accountant and neither seem sure what i need to do about this (which doesn't inspire me with confidence tbh!) ie does it need including on p11d if its under the £243/month? does it affect anythign on the p35?

Thanks in advance

[IR35 Avoider]

I have not read the linked HMRC document, but surely the situation is simple: you pay yourself whatever salary you were going to any way, and pay the childcare on top of that. Then the issue of salary sacrifice does not arise.

You only need salary sacrifice if the money to pay the childcare can't be take from money that would have been dividends, retained earnings or pension contributions. If you were already taking all contract income as salary and you're having problems meeting minimum wage then something's not right...

Something I read earlier this week is that the employer does need to assess which tax band you fall in (which governs how much you can get tax-free) at the start of each tax-year and keep a record of that assessment. You are legally required to have that record in order to be entititled to relief. I think the phrase HMRC use is something like "basic earnings assessment."

Edit: here we are

What are the qualifying conditions?
The legislation sets out a number of conditions that have to be met in order for the tax relief to apply. These are:
A. the childcare voucher or directly-contracted childcare relates to care for a child who –
(a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense, or
(b) is resident with the employee and is a person in respect of whom the employee has parental responsibility.
B. the care must be qualifying child care.
C. the scheme must be open –
(a) to the employer’s employees generally, or
(b) generally to those at a specific location,
(but where the scheme is provided through salary sacrifice or flexible remuneration arrangements, this condition will still be met if the scheme is not available to employees with earnings at or near the National Minimum Wage).
D. for employees joining schemes on or after 6th April 2011 that an estimate of the employee’s relevant earnings amount for the tax year must have been made at the required time.

When do employers have to carry out the basic earnings assessment?
If you join your employer’s scheme on or after 6th April 2011, your employer should carry out a basic earnings assessment when you first join the scheme and then annually at the start of the subsequent tax year. The assessment remains valid for the whole of the relevant tax year.
The annual assessment cannot be deferred until later in the year when final information on taxable benefits provided to you is reported by your employer on a Form P11D. It is an assessment made on the basis of information available at the start of the tax year or when you join the scheme.
If your employer does not carry out a basic earnings assessment, you will not be entitled to any tax relief on the childcare support you receive.

http://www.hmrc.gov.uk/thelibrary/employee-qa.pdf

[SimonMac]

Thanks for the advice, I was following this specifically

The employer should provide full details of the scheme and of the new contractual arrangements

So was trying to get my head around what contract I will need in terms of hours worked to meet the NMW but also still take a low salary

[Clare@InTouch]

See what she did there SM. She called you simple. These financial types calling their customers names is rampant. Don't stand for any of that nonsense!

[Jeremiah@RHJAccountants]

I agree with the above very simple and nothing to panic over.

Make sure you notify your accountant if they run the payroll for you.

[SimonMac]

See what she did there SM. She called you simple. These financial types calling their customers names is rampant. Don't stand for any of that nonsense!

Its ok I am sat on the sofa so not standing.

[SimonMac]

Nothing. Just pay up to £55 a week from your limited company direct to the registered childcare provider (ie. not your Mum if she's babysitting!). You cannot reclaim on expenses, and the amount you can pay is lower if your income (excluding dividends) puts you into higher rates or additional rates of tax. Simples

See now thats what I thought was the situation, but am being asked for contracts etc etc