Reply to: Paying childcare costs through company

[TheCyclingProgrammer]

What makes it existing ? If company paid directly to a childcare provider a few years ago (scheme started and there was no opt out), can we resume payments again for another child this year ?

As defined in the legislation, an “existing” scheme is any scheme - vouchers or direct - paid into in the 12 months preceding the specified date (which is the date that the scheme closes to new applicants and has now been delayed).

Or you could try reading the post directly above yours where I already explained.

[DolanContractorGroup]

Hi Sal,

The deadline to start a new childcare voucher scheme has been extended. If already a part of the scheme you will be able to remain on the childcare voucher scheme post October.

[sal]

Just to confirm this has been extended to the 1st October but thereafter you will need to look if you qualify for 'Tax-Free Childcare' instead.

What has been extended, the deadline to start a new scheme or the final date when you can make payments to/from existing scheme?

[DolanContractorGroup]

Just to confirm this has been extended to the 1st October but thereafter you will need to look if you qualify for 'Tax-Free Childcare' instead.

[Lumiere]

HMRC have told me the opposite. Whilst childcare voucher schemes can no longer be started after 1 April, existing ones can and there is no changes to directly contracted childcare..

What makes it existing ? If company paid directly to a childcare provider a few years ago (scheme started and there was no opt out), can we resume payments again for another child this year ?

[TheCyclingProgrammer]

Yes a further six months.

It may comes as no surprise that the advice I was given by HMRC may be incorrect, if you read the legislation which does specifically group both directly contracted childcare and voucher schemes together.

Childcare Payments Act 2014 - Explanatory Notes

On the plus side the above makes it clearer what is meant by already being in receipt of employer supported childcare - my reading of the above is that as long as you’ve been in receipt of either vouchers or directly contracted childcare in the year preceding the (now delayed) end date and you don’t explicitly opt out of getting it and start using the new system, you can continue to receive it after the end date.

[l35kee]

Whats that, 6 months from April? Should be ok then both of mine will be in school by then!

[TheCyclingProgrammer]

I'm also hearing on Twitter that the deadline for vouchers has been extended for another 6 months. Haven't found a source for this yet, presumably something mentioned in the Spring statement?

Edit: https://www.employeebenefits.co.uk/i...her-extension/

So plenty of time to get a direct contract or voucher scheme in place just in case.

[l35kee]

HMRC have told me the opposite. Whilst childcare voucher schemes can no longer be started after 1 April, existing ones can and there is no changes to directly contracted childcare.

My accountant advised getting a contract in place before this date as a precaution, but I did ask HMRC on Twitter and they did confirm to me that directly contracted childcare continues as before.

If your accountant thinks that directly contracted childcare cannot continue after April, I'd love to know what their source for that is because other than the reply on Twitter from HMRC I can’t find anything definitive.

Any chance you could link to the tweet?

[TheCyclingProgrammer]

i pay directly to the nursery, by my accountant just emailed me this...


https://www.sg-accounting.co.uk/blog...care-vouchers/

HMRC have told me the opposite. Whilst childcare voucher schemes can no longer be started after 1 April, existing ones can and there is no changes to directly contracted childcare.

My accountant advised getting a contract in place before this date as a precaution, but I did ask HMRC on Twitter and they did confirm to me that directly contracted childcare continues as before.

If your accountant thinks that directly contracted childcare cannot continue after April, I'd love to know what their source for that is because other than the reply on Twitter from HMRC I can’t find anything definitive.

[l35kee]

i pay directly to the nursery, by my accountant just emailed me this...

The rules on childcare vouchers are changing from 1st April 2018. If you are currently making payments direct to a childcare provider you will no longer be able to do so from 1st April 2018.

The introduction of Tax-Free Childcare means that parents/guardians cannot join an employer-supported scheme after their March payroll. If they are already enrolled in a scheme by that date then they can continue to use the childcare voucher scheme.

To continue benefiting from the current arrangement your company should set up a Voucher scheme with one of the online providers.

https://www.sg-accounting.co.uk/blog...care-vouchers/

[mickael28]

Salary sacrifice has nothing to do with it and makes absolutely no sense for somebody earning below the personal tax threshold as already mentioned above. The fact that childcare vouchers are *usually* offered as part of a salary sacrifice scheme doesn't mean they *have* to be.

Any employer can operate their own childcare voucher scheme. How you choose to administer your own childcare voucher scheme is up to you, so long as it complies with the rules.

Safe yourself the hassle and arrange to directly contract with the childcare provider.

Not sure why our accountant has said that if we administer our own childcare voucher scheme then we cannot use the business expenses route and we have to go with salary sacrifice.

As for setting it up with a childcare provider to avoid the hassle. What hassle could that be? I was thinking about doing it myself because I saw it quite straight forward, just issue vouchers and use them when needed, I couldn't see any prob. Is there something that could cause troubles if I do it myself?

[TheCyclingProgrammer]

Salary sacrifice has nothing to do with it and makes absolutely no sense for somebody earning below the personal tax threshold as already mentioned above. The fact that childcare vouchers are *usually* offered as part of a salary sacrifice scheme doesn't mean they *have* to be.

Any employer can operate their own childcare voucher scheme. How you choose to administer your own childcare voucher scheme is up to you, so long as it complies with the rules.

Safe yourself the hassle and arrange to directly contract with the childcare provider.

[mickael28]

We dont' currently have any childcare expenses, but we'd like to join the scheme before it ends. We were thinking about managing our own childcare vouchers rather than going to an external provider.

I was thinking about using the business expenses option, pay the a specific monthly amount from the standard business account to another business account we've got set-up just for this, issue ourselves with the relevant vouchers and use those ones in the future. So that we could paid them from the 2nd business account.

Our accountant has told us that for doing so the only option is via salary sacrifice. One could not just manage vouchers in-house when using the business expenses route.

Guys, I just wanted to confirm if that's your understanding as well? so that we can just go via the salary scrificy route in this scenario...

[DolanContractorGroup]

Childcare

There’s no point in taking a salary sacrifice if your salary is already below the income tax threshold.

I agree with this! No saving if your salary is below the income tax threshold. In my opinion you would want to look at Childcare vouchers but need to get this in place before the 5th April 2018 before the tax free childcare comes into effect.