Reply to: Paying childcare via company

[MarillionFan]

That's super and just goes to show how very fair it is!

I've sent this on, all a bit strange that somethinng that should be so black and white seems to garner differing opinions.

My accountant has come back to me after reviewing this and the other links in the thread and have agreed this is correct. They've instructed me to make the payments from the LTD company and provide the childcare invoices, they will do the rest.

[Notascooby]

Fair enough

My last word on the subject then Childishly Simple

That's super and just goes to show how very fair it is!

I've sent this on, all a bit strange that somethinng that should be so black and white seems to garner differing opinions.

[Clare@InTouch]

Fair enough

My last word on the subject then Childishly Simple

[Notascooby]

Update

SJD are still saying that dividends are included...

So I'll stick with this opinion although I do believe Claire.

[Notascooby]

news just in from my accountant

"This is the case for new schemes. The trouble is it works through a salary sacrifice and means that it cannot apply if you then would go below the minimum wage. I will look into this further."

That I know is bollox. It goes through as a company expense. (EDIT - see Claire's post above - for the real details)

Claire thank you - just emailed my accountant at another well known firm to ask why I was giving a bum steer on this and to see if I can over-pay for value I've not take (been paying £124 rather than £243) - although not sure if spanning accountancy years will mean I limited to do this from the start of my year which is May.

[Clare@InTouch]

news just in from my accountant

"This is the case for new schemes. The trouble is it works through a salary sacrifice and means that it cannot apply if you then would go below the minimum wage. I will look into this further."

We are bringing in salary sacrifice arrangements for our scheme but have a
small number of employees on low incomes. If they pay for their childcare
through salary sacrifice it will reduce the level of their earnings below the
national minimum wage. Is that okay?

No. Legislation relating to the national minimum wage prohibits the level of earnings
being reduced to below the minimum amount in these circumstances. You can either
choose to exclude these employees from your scheme or continue to provide
childcare support for them without requiring a salary sacrifice arrangement.

[FiveTimes]

news just in from my accountant

"This is the case for new schemes. The trouble is it works through a salary sacrifice and means that it cannot apply if you then would go below the minimum wage. I will look into this further."

[Clare@InTouch]

*Boing*

I've just had a discussion about childcare vouchers with the contractor sitting opposite me.
He's pointed me at this link <snip> which states that divs don't need to be considered.

But my accountant says that the 40% limit is salary plus divs - as I know I'm going to smash the 40% whilst taking minimum salary I've limited my payment to £124 per month but am i entitled to the full £243?

(yes I'll check with my accountant but I thought I'd ask the collective as someone else may be interested in the result).

I thank you...

Dividends are NOT taken into account when determining the amount you can claim.

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

Earnings and benefits to be included in the basic earnings assessment

The basic earnings assessment should include the following:
 Basic pay as stated in the employee’s contract of employment (salary,
wages and fees).
 Guaranteed contractual bonuses - an amount that will be paid as part of a
contractual arrangement as long as the employee remains in
employment, without any other conditions having to be met, eg, a ‘loyalty’
bonus or ‘golden hello’. But do not include performance-related or
discretionary bonuses.
 Contractual commission - where the commission represents a
contractually agreed proportion of income generated by the employee for
the business. This should be based on commission earned with the
employer in the previous year, or on an average of two previous years of
work with you where commission has been earned, if that produces a
more beneficial result. HMRC will accept an estimate on this basis without
further enquiry, but employers may be asked to justify any other basis
used. This means that where an employee joins your childcare scheme
on taking up employment with you, commission will not form part of their
basic earnings assessment for the period up to 5 April of that tax year.
 Guaranteed overtime payments - paid whether worked or not (eg,
payments of four hours’ guaranteed overtime for working every third
Saturday, even if the amount of time worked is less or no work is carried
out on that day at all). But do not include overtime payments that are
not guaranteed.
 Location or cost of living allowances, eg London weighting.
 Shift allowances.
 Skills allowances (eg, an allowance for holding a qualification in First Aid).
 Retention and recruitment allowances.
 An ‘allowance’ here is taken to be a guaranteed/unconditional payment,
whereas a ‘bonus’ may not be.
 Market rate supplements.
 The cash equivalent of any taxable benefits that fall within Part 3 of the
Income Tax (Earnings and Pensions) Act 2003, and which are not exempt
from income tax under Part 4 of that Act, (eg, a company car made
available for private use; fuel provided by an employer for private use in a
company car; cash vouchers; employer-supported childcare in excess of
tax relief entitlement; living accommodation, etc). But do not include
exempt benefits such as works buses, work-related training, etc.

[FiveTimes]

I'm still waiting on my accountant. This has completely thrown them. To be fair they're not really a contractor orientated accountancy firm but I'm a little worried by there lack of understanding of it.

I've just emailed my accountant the link and asked them to get back to me so I can hopefully sort it out.
If its a thumbs up all I need to do is get the registered child minder and before/after school club to invoice my Ltd instead of Parent/Guardian

[MarillionFan]

*Boing*

I've just had a discussion about childcare vouchers with the contractor sitting opposite me.
He's pointed me at this link <snip> which states that divs don't need to be considered.

But my accountant says that the 40% limit is salary plus divs - as I know I'm going to smash the 40% whilst taking minimum salary I've limited my payment to £124 per month but am i entitled to the full £243?

(yes I'll check with my accountant but I thought I'd ask the collective as someone else may be interested in the result).

I thank you...

I'm still waiting on my accountant. This has completely thrown them. To be fair they're not really a contractor orientated accountancy firm but I'm a little worried by there lack of understanding of it.

[Notascooby]

*Boing*

I've just had a discussion about childcare vouchers with the contractor sitting opposite me.
He's pointed me at this link <snip> which states that divs don't need to be considered.

But my accountant says that the 40% limit is salary plus divs - as I know I'm going to smash the 40% whilst taking minimum salary I've limited my payment to £124 per month but am i entitled to the full £243?

(yes I'll check with my accountant but I thought I'd ask the collective as someone else may be interested in the result).

I thank you...

[Swamp Thing]

OK, I have fallen asleep on this issue. Can I clarify the following for my own situation:

Ltd company, both husband and wife are employees. We both take £8K gross salaries.

The company can pay childcare directly to the Ofsted-approved nursery £55 per week per employee. Or expressed monthly, a total of £110*52/12 = £476 p.m. (rounded down). If childcare is higher than this, employee pays the extra from post-tax income.

Nursery must invoice company each month.

No HMRC reporting requirements for either employer or employee. No BIK, no P11D to file.

Is this process and the childcare amounts correct?

Also:
If my wife takes a 2nd job that say, takes her total PAYE salary to £24K, does my company have to stop paying childcare on her behalf?

Thanks, Swampy

I shall reply to my own post.

Yes to all of the above. £486 is the monthly figure (2 employees).
IR115 has all the detail.
I need a new accountant...

[MarillionFan]

Are they NW?

No. They're not really contractor based. It's a local firm.

[SimonMac]

I've just pointed my accountant at this as they were unsure how it worked when related to contracting.

Are they NW?

[MarillionFan]

I've just pointed my accountant at this as they were unsure how it worked when related to contracting.