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Childcare Vouchers and Tax-Free Childcare

Childcare Vouchers and Tax-Free Childcare

We've been having a discussion in the office re: childcare vouchers and the proposed new scheme due to start in 2017 and specifically how they relate to our clients who own and manage limited companies.

Under the current system of childcare vouchers, someone joining a scheme can get one of three maximum amounts tax free from their company, £243 per month if basic rate, £124 per month if higher rate or £110 per month if additional rate. The confusion is over what determines if someone is basic, higher or additional as it's my understanding that it doesn't include any income other than employment income so our directors taking £0K - £11K salaries but with rent and dividends making their total income over £100K can still get the full £243 per month, but I'm alone in this assertion.

My question is am I right or are the others asserting it's determined by your actual tax status correct? And is the situation different for the new Tax-Free Childcare scheme because I think that does depend on your total taxable income being under £100,000 but I'm not 100% on that.

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13th May 2016 14:17

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By stratty
13th May 2016 15:55

Current regime is determined by the contractual pay and does not include dividends. Unsure of the details on the new regime.

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to stratty
13th May 2016 16:05

stratty wrote:

Current regime is determined by the contractual pay and does not include dividends. Unsure of the details on the new regime.

Is this based on relevant earnings as per the normal employer earnings assessment???

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to bumpdinkwhallop
13th May 2016 16:52

bumpdinkwhallop wrote:

stratty wrote:

Current regime is determined by the contractual pay and does not include dividends. Unsure of the details on the new regime.

Is this based on relevant earnings as per the normal employer earnings assessment???

The employer can only go on the earnings they pay. They're not expected to ask the director (even if it's his company) whether he has any other income. It's a confidentiality thing.

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to lionofludesch
13th May 2016 17:02

The employer can only go on the earnings they pay. They're not expected to ask the director (even if it's his company) whether he has any other income. It's a confidentiality thing.

[/quote]

Nice one.

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to bumpdinkwhallop
14th May 2016 09:51

bumpdinkwhallop wrote:

The employer can only go on the earnings they pay. They're not expected to ask the director (even if it's his company) whether he has any other income. It's a confidentiality thing.

Nice one.

[/quote]

The point being that they have to be taxed on an equal footing with employees who aren't the sole directors of their own companies.

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to lionofludesch
14th May 2016 12:32

The point being that they have to be taxed on an equal footing with employees who aren't the sole directors of their own companies.

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Thanks for your posts. I personally take £13,916 from my Ltd Co including the £234 vouchers and i am also a higher rate tax payer (rental & dividends). We do the same with another few clients but was concerned i had made an arse[***] of it if an office full of CAs are of the opinion its income from all sources and not relevant earnings the employer needed to include in the earnings assessment.

squeeky bum[***] time for an hour while i read the EIM which detailed exactly what income was to be included in the employers assessment.

Thanks for enlarging on your initial comment.

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to bumpdinkwhallop
14th May 2016 18:26

Thanks for your posts. I personally take £13,916 from my Ltd Co including the £234 vouchers and i am also a higher rate tax payer (rental & dividends). [/quote]

You could take £243. :-)

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