Childcare Vouchers are a pretty decent perk that employers can provide to their employees. They effectively enable a company to pay for a certain amount of childcare for an employee, without any need for the employee to pay tax on that amount. Most employees can receive up to £55 a week of vouchers, tax-free - that's £2,860 a year, tax-free, which isn't bad.
The scheme can be used even if you're the director of your own company and have no other employees.
This is a pretty good resource for further reading.
A few points to bear in mind.
- You do actually have to be paying a registered child carer or nursery for care. You can't just take the money and keep it, or give it to a (non-registered) family member!
- This may seem obvious, but it's the biggest single reason that tax planning strategies fail - you need to actually do it properly. Some people think it's OK if they just get their company to pay for all their childcare costs, and if HMRC have a look at the arrangement it'll probably be OK. It won't. You need to have everything in place and done correctly. If that seems too much hassle, then tax-efficient childcare is not for you, unfortunately!
- You can't use the scheme for your own childcare costs if you're a sole trader or partner.
- You have to make the scheme available to all employees (broadly speaking).
- It's possible that receipt of vouchers could have a negative impact on receipt of state benefits - specifically the childcare element of Working Tax Credits. So look out. There's a calculator which may help here.
If you'd like to explore this further, get in touch.
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