Childcare costs through limited company

[DigitalUser]

Does anyone know what the new rules are regarding childcare, specifically around putting costs through your limited company. I know the rules were changed in October 2018, but I'm reading and being told contradictory information so would be good to get some clarification.

The scenario I have is:
- one child in nursery since 2017, paid direct by my limited company. Can I continue to do this?
- same child also attends a couple of days pre-school with a voluntary contribution paid personally by me - can this be put through the limited company?
- second child in nursery since summer 2019. This is paid direct by my limited company but my accountant (Crunch) seem to think I can't put this cost through the company. Is this correct? Is there anything else available?

Any advise appreciated.

It's been replaced by this - Tax-Free Childcare - GOV.UK

AFAIK no direct contributions via Ltd company are permitted - but I've also not enquired.

[GhostofTarbera]

Not planning on, contract is outside IR35 public sector. (Assuming that's why you are you asking?)

Asking because if umbrella and over £50k you lose family allowance and over £100k you lose all 15-30 free hours - meaning it will cost you another £10K a year


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[TheCyclingProgrammer]

The short version is: you can continue to use the old childcare voucher/directly-contract childcare (paid through YourCo) scheme *if* you had a childcare scheme in place before the rules changed. So I'm fairly confident you can continue to put the costs of the first child through. I still pay for my youngest's nursery place under a direct contract agreement with the nursery.

When the rules were changed to the new tax-free childcare scheme, it was closed to new applicants. I'm not certain if that prevents you from claiming for your younger child however, so I would err towards your accountant's advice on that one.

[TheCyclingProgrammer]

It's been replaced by this - Tax-Free Childcare - GOV.UK

AFAIK no direct contributions via Ltd company are permitted - but I've also not enquired.

Direct contributions from Ltd company are not permitted under the new scheme, only the old one which as I said above, can only be applied for schemes already in place before the rules changed.

[concord]

If my wife becomes a director and earns a salary of £719 or so a month, does this mean we qualify for tax free childcare? (ie is she "in work"?) Do dividends count towards this income?

We're relatively recent parents looking at nurseries now so I'm starting to look at this.

[GhostofTarbera]

If my wife becomes a director and earns a salary of £719 or so a month, does this mean we qualify for tax free childcare? (ie is she "in work"?) Do dividends count towards this income?

We're relatively recent parents looking at nurseries now so I'm starting to look at this.

No (unless your child is 3 or 4)

You will get the grand total of 20% cash add on by the government thus

Childcare is £1600 a month, all you need to find is £1340 from your own money and HMRC will top it up to £1600

And if you take an inside IR35 contract your salary will probably be more than 100K and you get nothing


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[concord]

Thanks for the details.

Would my wife still be considered my dependent even though the company provides her an income?

[DigitalUser]

Thanks for the details.

Would my wife still be considered my dependent even though the company provides her an income?

She'll need an income. Consider putting her through as company secretary and paying minimum wage.

[northernladuk]

She'll need an income. Consider putting her through as company secretary and paying minimum wage.

Like he said he would three posts up?

[concord]

I'm actually not sure if GhostofTarbera responded "no" to the question about dividend income or about her director's salary.

It says here on the gov.uk site:

You’ll need to expect to earn a certain amount over the next 3 months. This is at least the National Minimum Wage or Living Wage for 16 hours a week on average.

For example, over the next 3 months you expect to earn at least £1,707.68 - the National Living Wage for people over 25.

So if she earns £719 a month through PAYE, doesn't that meet the requirement here?

I'm also wondering if when an official document asks me how many dependents I have, do I need to include my wife in the count given the above salary?