Are you an employee or owner of a SME Limited Company? If so you can take advantage of the Government backed Childcare Voucher scheme without incurring any extra expense in administration. The childcare voucher scheme allows for up to £243 per month to be paid to an OFSTED registered childcare provider free from tax and NIC. The value of this monthly payment is then deducted from the gross salary of the employee. This means if an employee is a basic rate tax payer it is worth up to £933 in tax and NIC per year. If an employee is a higher rate payer it is worth up to £1,225 per year in tax and NIC.
All your Limited company needs to do is pay directly to the childcare provider a fixed sum every month (up to the value of £243). A very simple agreement between the company and the childcare provider outlining the payment arrangement, details of the child’s name and age, and the OFSTED number of the childcare supplier is all that is required by the HMRC as back up.
Even if you are the sole employee of your own Limited company you can take advantage of this scheme. If you are interested in the childcare scheme the HMRC has a useful ‘How to’ guide for small businesses: http://www.hmrc.gov.uk/childcare/smechildcareguide.pdf . More details are provided in: http://www.hmrc.gov.uk/helpsheets/e18.pdf .
Note however, for those employees joining a company scheme on or after 6th April 2011, the higher rate tax payer benefit is being reduced to the basic rate tax benefit value.
So if you are working in a small company and still want to offer some of the benefits of a larger corporate to your employees this is a really simple and beneficial way of doing so.
Disclaimer: please contact your HMRC office for further advice before implementing a childcare voucher scheme in your company.
Rachel Fletcher, Founder at Rachel Fletcher Associates Ltd, Executive Coaching for Finance Managers in Business
As a Finance Director working in a Global FMCG working with Sales, Marketing and Operations teams, Rachel has specialised in bringing Finance expertise to the heart of business. She is passionate about helping Finance professionals transform into Business Leaders.