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Childcare costs for a sole director company

Childcare costs for a sole director company

Is a sole director treated just like having another employee when it comes to paying out for childcare.Can the company pay up to £55 per week and secure a CT deduction whilst not incurring any BIK. Also does the contract have to be between the childcare provider and the director?

Thanks for any help given


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17th Nov 2011 12:23

Yes & No

Yes - a director is regarded as an employee.

No - the contract must not be between the childcare provider and the director.  It must be between the childcare provider and the company, with the childcare provider invoicing the company, not the director personally, in respect of the £243 a month.

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17th Nov 2011 12:31

Or use DIY vouchers

Euan's response is perfectly correct.

One way of simplifying in this situation if you want to just have a standard agreement between the director/parent and the childminder is to use a DIY voucher scheme (you only need 1!).  On day 1, the director (with their parent hat on) hands over her £243pm voucher and cheque/cash for the balance.  The next day the director (wearing a company directors hat) turns up with a company cheque for £243 to redeem the voucher.

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By cde123
17th Nov 2011 14:31

What if a sole trader instead?

Thank you for your replies. I just wondered what is the position though if you are a sole trader-thought this was not tax deductible? In reality the business owner is the same but the trading status different?

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17th Nov 2011 14:35

That's completely different...

For a company, the proprietor is an employee and the payment by the company is tax deductible for CT purposes as employee remuneration.  It's not then taxable on the individual as remuneration because of a specific employment income exemption.

For a sole-trader it falls at the first hurdle, because isn't remunerating an employee.  It's just drawings.

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