If like most of our small business clients, you are juggling family life whilst running your business, you might be interested to know more about childcare vouchers and how they can help you financially.

Firstly, the word voucher is misleading and has become a generic term for Companies to use who sell “childcare voucher schemes”.  What we are going to explain is how employers can pay for childcare for their employees, no vouchers needed.

The government, to assist a working family, give you the option of paying for your childcare from your gross wages. The amount you can pay towards childcare is as follows:

Basic rate tax payers                               £55                    £243              £2,915

Higher rare tax payers                             £28                    £124              £1,484

Additional rate tax payers (45%)               £25                    £110             £1,325

As these amounts are deducted from your gross wages, your tax and national insurance contribution will be lower. For example, if you were paid a monthly salary of £1,000, rather than being taxed on that amount, you are taxed on £757 (£1,000 – £243).

There are, as with all government incentives, rules that must be followed:

• Evidence that the scheme is offered to all staff where appropriate (e.g. the material used to promote your scheme or staff handbook)

• Details of the child using the childcare, for example their name and date of birth

• Details of the child carer(s) used, including their registration or approval numbers and, if appropriate, when their approval expires

• Evidence that your employees participating in childcare schemes are required to inform you of any changes in the registration, approval status, or their child carer

What are the benefits of the scheme?

• The amount paid to the childcare provider is a tax deductible expense, therefore you are reducing your corporation tax liability!

• The childcare contribution is available for both parents

• If you are an owner run business, this scheme will allow you to participate too, which can be a good method of extracting funds from your company

If your current accountant has not suggested childcare payments to you, then maybe you should consider calling Nimbus Accounting. If you would like to discuss this or any other accounting or tax questions, please feel free to get in touch on 01273 782 742 and speak to one of our qualified accountants.