company pays ofstead approved nanny direct under same PAYE scheme as the 2 H&W directors (the only other employees)
£486 per month deemed tax free childcare, the balance is P11D bik with class1A NIC
is this arrangement ok? are vouchers even necessary in this arrangement - I don't think so
I've read the HMRC 4 page guidance "employer supported childcare"
Replies (5)
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Where does the nanny look after the child?
If it is at the parents' home (or any other premises used wholly or mainly as a private dwelling), it does not qualify for the tax-free benefit.
As I have said in response to questions on this topic many times in the past, vouchers are not necessary - indeed, it simply means paying a handling charge to a voucher company.
ITEPA
I am not entirely convinced that HMRC guidance always states the law correctly, so I was taking it from the horse's mouth, which in this case is s.318(4) ITEPA 2003 www.opsi.gov.uk/acts/acts2003/ukpga_20030001_en_16. It says:
"Condition B is that—
(a) the premises on which the care is provided are not used wholly or mainly as a private dwelling, and
(b) any applicable registration requirement is met with respect to the premises."
However, I did look up Childcare on the HMRC website for you and found www.hmrc.gov.uk/childcare/childcarersguide.pdf. Under the FAQs I am an approved nanny and receive some of my pay in childcare vouchers for providing childcare services and Do I have to be registered or approved?, it indicates that a nanny may be approved, rather than Ofsted registered, to provide child care in the home and that this could qualify for the non-taxable benefit. Further on, under How can I become an approved child carer?, it says:
"If you are an individual carer providing care in the child’s home ... you can be approved through the Childcare Approval Scheme administered by Nestor Primecare Services Ltd on behalf of the Department for Education and Skills (DfES)."
I am not sure how this complies with the conditions of s.318 ITEPA, but it seems to give you what you are looking for.
But isn't that the distinction?
I thought that was the point, "employer provided childcare" has to be on non-residential premises, but childcare vouchers can be used for all forms of childcare, including those such as childminders, who, by definition use residential premises.