I've got a client a small company just 2 directors, no other employees, both ladies have young children and want to set up a childcare voucher scheme.
I've not dealt with one before and will be grateful for any help and tips.
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Don't
With only two people in the scheme, don't bother with vouchers. Just ask the nursery to invoice the company for the tax-free amount with any balance being charged to the parents.
Vouchers are better
With only two people in the scheme, don't bother with vouchers. Just ask the nursery to invoice the company for the tax-free amount with any balance being charged to the parents.
I disagree Euan. Vouchers have several advantages over direct contracts, not least the fact they have no time limits (other than 1st Sept after the child's 15th birthday) and can be used for more grown-up activities such as music lessons and horse-riding, or anything requiring the carer to have an OFSTED license. As such, they can be saved for years until the parents get round to using them.
The employer scheme should work out far more beneficial than the new Government scheme for owner-directors, especially if they keep their salaries/benefits below the higher rate threshold.
My advice would be to set up your own vouchers scheme whilst you still have the choice and decide later on if you want to keep it. No need to go to one of the childcare voucher companies (cheap as they are). Nothing to stop you producing your own vouchers, so long as they are accepted by the childcare provider, which you can do simply by getting them to sign/stamp the vouchers in exchange for a company cheque/DD/SO.
Could be a nice little income stream at say £200 per parent per annum, and more than justified by the tax savings.
Yesterday's news?
New scheme in Autumn 2015.
Tax-free childcare scheme
The new tax-free childcare scheme moved a step closer when the legislation to enact the scheme received Royal Assent in December 2014. The scheme will support working families with their childcare costs and will launch in autumn 2015, the exact date has not yet been confirmed. The new scheme will replace the current salary sacrifice scheme and will be open to all qualifying parents including the self-employed and those on a minimum wage.
The scheme will be worth up to £2,000 per child each year. Initially, to children under the age of 5, but will be expanded over time to include all children under 12. For every 80p in the £1 contributed by parents an additional 20p (or 20%) will be funded by Government up to a maximum of £10,000. Parents will be able to have one childcare account for each qualifying child. In order to be eligible to use the scheme neither parent can earn more than £150,000 a year.
A consultation on the detailed rules for the scheme was launched last summer. The consultation closed on 13 October 2014 and HMRC now responded to comments that were made, primarily from childcare providers and children’s charities. As a result some changes have been made to the draft regulations for the scheme. This includes an extension to the time allowed to open a childcare account, a new option for self-employed parents to calculate their income over a tax year and an increase in the maximum amount parents of disabled children can pay into their childcare accounts.