A big thanks to Scott Gomersall from SDG Accountants on Cavendish Street in Barrow for this blog.
Childcare voucher schemes are a method of using a Tax and National Insurance (NI) cost cutting to meet all, or some, of your childcare costs.
Using childcare vouchers supplied to you by your employer is a simple and easy way to pay for childcare with Tax and NI free funds, it also makes childcare more affordable. It is a fantastic way of extracting funds effectively, having your company contribute to your childcare costs and what is best of all it is a tax deductible expense.
The scheme must be open to all employees however, if this is a husband and wife company there may only be two employees. A husband and wife company can extract £55.00 each tax and NIC free per week. Therefore, in a 12 month accounting period this would save £1,144 in corporation tax (based on current rates). The costs of the administration of the scheme are also tax deductible.
The qualifying conditions are that:
• your employees can only use the childcare vouchers to pay for childcare that has been registered or approved;
• The child :
o is a child or stepchild of the employee at whose expense, either in full or in part, the child is maintained; or
o is resident with the employee and for whom the employee has parental responsibility;
o qualifies up to 1 September after their 15th birthday (or 1st September after their 16th birthday if they are disabled); and
• Your childcare voucher scheme is generally available to all of your employees where the scheme operates.
For more information on how you can set up a scheme for your workforce – contact Scott on 01229 838567