Childcare

Childcare

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I am the sole director of my limited company. I currently only pay myself a salary up to the tax threshold. Would there be any problem with getting my own company to contract with my childcare provider for £55 per week and increasing my salary by this amount to be paid to me PAYE & NIC-free?
JW

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By User deleted
27th Feb 2007 10:23

Don't complicate it with salary sacrifice
Following Steven's point, you don't need to contractually increase your salary and then do a salary sacrifice, that's a very long winded way of doing it! Not to mention complying with the salary sacrifice rules.

Just amend your contract to be paid £x (as you are currently) with an additional benefit of £x paid as childcare costs. As long as it is to a registered provider and you have made it available to all staff etc you will be fine.

Childcare can be paid as an extra benefit OR as a salary sacrifice. Don't complicate it by doing salary sacrifice when you don't have to.

Colette

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By Dave Collier
21st Feb 2007 14:18

Childcare Vouchers not necessary
Steve, it is not necessary to issue Childcare Vouchers. The company can contract directly with the childcarer to pay the fees. The childcarer must be registered however.

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By AnonymousUser
21st Feb 2007 14:17

Clarification

I was not suggesting that you intended deliberate fraud; rather that you would be falling foul of the regulations. As Mr Smith says, this is nothing to do with the payroll. By putting it through as extra salary you would be breaking the rules. It is actually simpler to do it properly.

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By User deleted
21st Feb 2007 13:51

Childcare Vouchers....
...There are loads of posts on this site over the last few years concerning childcare vouchers. The basis of the system is that your company issues you, the employee, with childcare vouchers and you are able to redeem them with an approved/registered childcare provider. There are no implications for payroll.

You can use a 3rd party to provide the vouchers for you or you can produce thme yourself.

I suggest you do a search on this site for previous posts. Also search for E18 on the hmrc website.

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By User deleted
21st Feb 2007 14:24

Is National Minimum Wage an issue?
Thank you, I have previously searched the site & looked at the guidance . My concern is that, as I am director of my own limited company, and do not have to be paid the National Minimum Wage, can I still have childcare vouchers? When I inquired about a voucher scheme, I was told that vouchers could only be used via a salary sacrifice arrangement which would still leave me with pay at the NMW level. Do you know if this applies to directors?

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By User deleted
21st Feb 2007 15:51

pay yourself 5030 + tax free childcare
You can pay yourself yourself £5035 + tax free childcare without triggering any tax liability. There is no NWM issue with director.

Contrary to earlier comments, yes, you would contractually increase your salary to be around 5035 + (55x52). You then sign a salary sacrifice agreement with your company. so that you will be paid 5035 cash + tax free child care voucher of £55 per week.

What you are not allowed to do is of course to pay yourself the extra £55x52 into your bank account, they must go directly to the child care provider. You can either print your own voucher and ask the child care provider to sign to redeem, or you can, as other's have suggested, sign an agreement with the child care provider and pay them directly by BACS etc.

Hope this help.

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By User deleted
21st Feb 2007 08:47

Childcare comment
Thank you for your comment. I think you must have misunderstood, or I have interpreted incorrectly. I have no intention of doing anything wrong and may indeed be making this more complicated than it is. I meant for my company to contract with the childcare provider directly, so this part is ok. I just thought that somehow this payment would then have to be declared as a benefit to me, so wanted to make sure I covered this via the payroll if necessary, even though it is PAYE and NIC free.

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By AnonymousUser
20th Feb 2007 15:19

Yes, a huge problem, but there is an easier way.

If your company contracts with the child care provider then your company must pay the child care provider direct.

Paying yourself more salary ("tax free") to enable you to pay the child care provider makes a nonsense of the whole thing and probably constitutes fraud, which is a reportable crime.

Form a contract between your company and the child care provider and arrange for the company to pay them by monthly standing order or by termly invoice or whatever. Don't complicate a simple issue.

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