I need to assess the tax-free limit of childcare vouchers for an employee who will be ceasing directorship of a company and becoming a regular employee of that same company, and their pay will jump significantly, but will remain within the basic rate band at the end of the tax year (I assume I will need to take into account the salary they will earn up until 5 April 2022 rather than the new yearly salary). However, they also have dividends from the company taken before the change occurs, which will move them into the higher rate.
I understand that the assessment of earnings should only take into account that employment only. However, should the dividends be included? Also, do I include the director's pay in the assessment as technically they were employees then as well?
In addition, the vouchers they purchase are already higher than the tax-free amount for basic rate tax payers. Provided the dividends should be excluded, do I choose the tax-free amount for basic rate tax payers and anything over will be shown on a P11D and the tax return after the end of the tax year? Although, I cannot really see how this would work because I would only include the amount that is over the tax-free amount. What about the element of the voucher that is deducted as salary sacrifice?
I would be grateful for any suggestions. Thank you.