Can I Put Childcare Costs through My Company? Part One

The childcare voucher scheme is a fundamental aspect of the government’s childcare policy and can be operated through employers. The scheme basically allows parents to pay for their childcare needs out of their pre-tax salary. For parents, the advantages of this scheme are both clear and favourable. You can find out more about this scheme by clicking here.

Childcare vouchers that are operated under this scheme qualify working parents to claim up to £55 per week. This particular allowance is applicable to each individual, so a working couple can claim two sets of vouchers which sums up to £486 per month.

Childcare vouchers used under the scheme can be utilised right from the moment a baby is born up to the age of 15. If the child is disabled, the age limit extends to 16 years. The accountant of a limited company will have the information regarding such limits.

The Major Benefit of the Childcare Voucher Scheme

The Major Benefit of the Childcare Voucher Scheme

The principle benefit of childcare vouchers is that they are very tax-efficient and offer substantial tax and national insurance savings. Usually, most employers offer what is commonly known as ‘salary sacrifice’ scheme which effectually means that working parents exchange a part of their income for childcare vouchers.

Some generous employers might offer vouchers on top of existing salaries. By participating in a salary sacrifice childcare voucher scheme, an employee decides to trade a part of their wage and in return, receives childcare vouchers. These vouchers provides special tax and insurance advantages which basically mean that for each £1000 that an employee gives up which is technically £700 net after tax and deductions, they will receive £1000 of vouchers in effect, thus gaining £300.

At present, the childcare voucher allowance is £55 per week for basic taxpayers and higher rate taxpayers who participated in the scheme prior to 5th April, 2011. For working parents this means that they will we be able to claim £243 of childcare every month, which amounts to a maximum yearly gain of £933.

Higher rate taxpayers who became a part of the scheme after 6th April, 2011 will be eligible for only £28/22 per week of childcare. This stills sums up to a saving of £623 per year. However, it is very crucial for parents to remember that these limits do not depend on the number of children involved. The limits remain the same irrespective of the family having just one child or several.

Why You Should Put Childcare Costs through Your Company?

Why You Should Put Childcare Costs through Your Company?

With each passing year, the number of working parents in the UK is increasing. This has made establishing the perfect work/ life balance even more important in employees. If employers can restore the peace and calm of their employee’s mind about childcare, this will help amplify their morale and also curtail absenteeism.

In case of start-ups, it’s important that the finances are streamlined from day one. Introducing childcare vouchers in the picture can work in your favour and retain employees who are your company’s invaluable assets.

The costs involved in setting up and running the scheme successfully is less than saving your business makes. So, in a way this scheme does save your money.

Your limited company does not have to pay National Insurance on Childcare Vouchers, so you can save up to £402 every year for every employee who enrol themselves for the scheme. Plus, it also helps a limited company in tax planning, so there is absolutely no reason why you shouldn’t be providing this scheme.

You can:

  • Attract and retain your best staff
  • Enhance your image as a caring employer
  • Help cut down absenteeism
  • Improve productivity
  • Avoid paying NI
  • Pay for any approved or registered childcare providers

Thus, provision of this scheme has nothing but benefits in store for you as an employer as well as for your employees. So, plan for your start-up thoroughly and avail business services for assured success of your venture!

For more information on this any many more aspects of tax and savings, contact us today.

Northants Accounting – Accountant Testimonials – Northampton Accountancy Services – Northampton Tax Services – Xero Partner

Tel: 01604 330129 Email:

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