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silvys
22nd January 2013, 17:19
I am in the process of selecting an umbrella company which I am going to use for an upcoming contract.

I phoned up one of the more reputable umbrellas (Contractor Umbrella) and was shocked when they told me that the provider they use to manage their childcare voucher scheme takes a 10% fee for this.

I have in the past had a limited company and managed my own scheme and the full extent of the work was writing out one cheque a month ....which took all of 30 seconds

Can anyone recommend an umbrella that uses a provider charging a more sensible fee? (Looking around the internet and talking to permies, providers generally charge an admin fee of 2 to 3.5%)

Given this is a saving which the government provides to help working parents with kids it seems like daylight robbery that such a significant part of that saving is being taken away in admin fees for doing almost nothing.

Waldorf
22nd January 2013, 21:58
Can I ask why you stopped using a limited company?

It is for the reason you state why your own company is the better option even if you are caught by IR35.

Also remember that very soon, umbrellas will have to start enrolling you into the state pension scheme, which will cost you 8% of your income once it is fully up and running.

silvys
23rd January 2013, 15:02
My limited company is being closed down. Because I will benefiting from 10% entrepreneurs relief.
I’m not really in a position to restart a ‘phoenix’ company the next day – so unfortunately umbrellas are the only other option (unless anyone knows of anything else – not interested in the EBT schemes)

Can you explain what you mean by “which will cost you 8% of your income”? I assume if I was planning to make a contribution to the company pension scheme greater than that anyway then this wouldn’t impact me?

Waldorf
23rd January 2013, 23:40
Without the details it is hard to say, but not sure why you have closed your company and then gone to a brolly. Depending on why you did this, you could start a new company but you need to discuss this with your accountant to be sure you don't breech any rules. My guess is that you could move to a company now.

If you are happy with pensions, then yes, you can pay more in, my problem is with pensions as a vehicle for my retirement.

silvys
24th January 2013, 13:52
My background is the limited company has a large cash balance - going through MVL and paying 10% tax under entrepreneurs relief is by far the cheapest way to get hold of the money.

I've never contributed to a pension in my life, so I've got no problem contributing (very) heavily to one whilst at a brolly - which then makes the brolly fairly tax efficient.

Interesting what you said about moving to another limited company. Are there any guidelines about how long you need to wait before doing it? I was planning to leave it a couple of years to be safe.

Craig at Nixon Williams
8th February 2013, 10:19
There are no firm guidelines on this. The purpose of the legislation which affects this (Transactions in Securities) is essentially to stop a tax advantage from arising as a result of closing one company and carrying on the same trade through another entity. To my knowledge there have been no high-profile cases of this legislation being applied to PSCs but where a tax advantage is being gained HMRC could attempt to challenge what you are doing - I guess the way in which you choose to proceed will depend upon your attitude to risk!

Marmalade
15th May 2013, 09:50
I am a bit disappointed also to see that Contractor Umbrella proposes to keep 10% of my Childcare Voucher money? I could see maybe charging an initial £10 set-up fee but not sure how up to £24 every month can be justified here?

Where is that CU lady when you need her then? :smile

IMHO they are sullying their brand with this policy.

LisaContractorUmbrella
15th May 2013, 12:38
I am a bit disappointed also to see that Contractor Umbrella proposes to keep 10% of my Childcare Voucher money? I could see maybe charging an initial £10 set-up fee but not sure how up to £24 every month can be justified here?

Where is that CU lady when you need her then? :smile

IMHO they are sullying their brand with this policy.

I'm here :wave:

Childcare scheme providers charge for administering the vouchers; the company that we use charges 7%. We also have additional costs from processing the vouchers and making payments to the scheme providers which makes up the balance

Would love to be able to do this sort of thing for nothing but if we did I don't think I would have a brand for very long - sullied or otherwise :wink

warrenboon
15th May 2013, 13:15
10% seems on the high side, the one I used (a couple of years back) charged 6% but I think they can vary significantly across providers. Their pitch was that the Employer's NI saving more than covered this.

(Bear in mind it's the scheme provider making the charge, not the CU.)

Hope this helps.

warrenboon
15th May 2013, 13:20
Right, I see that CU also add a fee for handling it, I guess you could set the scheme up yourself if you wanted to save the 3%. (I'd pay the 3% myself, it's a bit of a fuss to do as a 1-off.)

Marmalade
15th May 2013, 13:30
Thanks for your swift reply Lisa, 7% does not seem an attractively competitive offer for a company with 12,000 employees? I believe Kiddicare charges 3.5% and/or a price match promise. Please note that I am just a small contractor not a Voucher provider in disguise!

Information for Employers / KiddiVouchers Childcare vouchers (http://www.kiddivouchers.com/childcare-vouchers-employers.php)

Thanks for entering into a dialogue on this, not trying to be miserable but would look forward to seeing an improvement on this perhaps?

Marmalade
15th May 2013, 14:33
Still further to this, your Early Years scheme has very recently quoted a fee of 1.5% for my friend's company so perhaps you are paying too much for this Lisa?

'For an organisation with 10,000 + employees, our charge for providing the childcare vouchers, discussing the benefit with each of your employees over the phone, undertaking "one to ones" with interested employees on your premises and providing regular marketing materials, would be 1.5% of the voucher value'

was how the quote was phrased FYI.

LisaContractorUmbrella
15th May 2013, 15:52
Right, I see that CU also add a fee for handling it, I guess you could set the scheme up yourself if you wanted to save the 3%. (I'd pay the 3% myself, it's a bit of a fuss to do as a 1-off.)

We could do it that way but we would rather use specialist voucher providers :happy

Marmalade
16th May 2013, 09:33
We could do it that way but we would rather use specialist voucher providers :happy

Do you think you might work on the discrepency between the current margin of 1.5% and the 7% you are paying with your specialist provider?

LisaContractorUmbrella
16th May 2013, 10:02
Do you think you might work on the discrepency between the current margin of 1.5% and the 7% you are paying with your specialist provider?

I'll work on it Marmalade :wink

Marmalade
16th May 2013, 13:38
I'll work on it Marmalade :wink

Thank you Lisa for your 'can-do' attitude, I will watch this space.....

LisaContractorUmbrella
17th May 2013, 08:25
Thank you Lisa for your 'can-do' attitude, I will watch this space.....

We aim to please :smile

silvys
13th June 2013, 13:06
Hi Lisa,

Did you make any progress getting the fees reviewed?

Childcare vouchers are an important tax break which the government offers to working parents. If a basic rate tax payer is making a saving of 20% (+NI) and you are charging a fee of 10%, then almost half the savings that the vouchers offer is being eaten away in your fees.

LisaContractorUmbrella
13th June 2013, 13:18
Hi Lisa,

Did you make any progress getting the fees reviewed?

Childcare vouchers are an important tax break which the government offers to working parents. If a basic rate tax payer is making a saving of 20% (+NI) and you are charging a fee of 10%, then almost half the savings that the vouchers offer is being eaten away in your fees.

Actually it isn't us charging 10% - we have to pay a company to administer the scheme for us

Wij
2nd September 2013, 18:15
I'm currently contracting and using Orange Genie as an umbrella company.

They run a childcare voucher scheme with Kiddivouchers. They don't charge for the service but they don't pay until the end of the month.

If I get paid on the 5th - 6th of the month the childcare voucher deduction doesn't get transferred to Kiddivouchers until the last working day of the month and then by the time Kiddivouchers has transferred it you're looking at around the 2nd of the following month.

You just have to make sure you're up to date with your childcare provider as your payments are all going to be a month in areers.

Lance
23rd September 2013, 13:54
My daughter's nursery fees are well over the threshold of £243. In fact if both me and my wife (full time employed elsewhere) take the full £243 each there is still an outstanding balance.

As a new contractor, yet to start first contract but in the process of setting everything up, my question is whether I need to use a voucher process at all?

Can I just pay £243 direct from my company bank account every month and top-up the rest out of my personal money?

Lance.

Craig at Nixon Williams
23rd September 2013, 15:40
My daughter's nursery fees are well over the threshold of £243. In fact if both me and my wife (full time employed elsewhere) take the full £243 each there is still an outstanding balance.

As a new contractor, yet to start first contract but in the process of setting everything up, my question is whether I need to use a voucher process at all?

Can I just pay £243 direct from my company bank account every month and top-up the rest out of my personal money?

Lance.

There is no need to use a voucher scheme - you can simply set up an agreement between the childcare provider and your company for part of the fee (£243) to be paid by the company.

You need to ensure that a copy of the agreement is retained for the company's records in case of an enquiry by HMRC.

Hope this helps!
Craig

Lance
23rd September 2013, 17:08
Perfect. Thanks Craig.

Clare@InTouch
23rd September 2013, 17:13
Just to add to what Craig rightly said - if your child is too young for nursery then you may want to consider buying vouchers as you can save them and use them at a later date. You'll incur an admin fee from the voucher provider, but it will enable you to save the vouchers for later.

7of9
13th January 2014, 15:27
There is no need to use a voucher scheme - you can simply set up an agreement between the childcare provider and your company for part of the fee (£243) to be paid by the company.

You need to ensure that a copy of the agreement is retained for the company's records in case of an enquiry by HMRC.

Hope this helps!
Craig

Hi Graig,

My account manager said mine is 55 pounds per week so roughly 238 pounds per month. I take 7680£ salary, is that the reason why my limit is slightly lower.

Thanks!

eek
13th January 2014, 15:36
Hi Graig,

My account manager said mine is 55 pounds per week so roughly 238 pounds per month. I take 7680£ salary, is that the reason why my limit is slightly lower.

Thanks!

Um because HMRC says its upto £55 a week or £243 a month see http://www.hmrc.gov.uk/leaflets/ir115.pdf

and the HMRC logic is based on the possibility of there being a 53 week payment year rather than 52 weeks...

Craig at Nixon Williams
13th January 2014, 15:37
Hi Graig,

My account manager said mine is 55 pounds per week so roughly 238 pounds per month. I take 7680£ salary, is that the reason why my limit is slightly lower.

Thanks!

The legislation (see http://www.hmrc.gov.uk/leaflets/ir115.pdf) says £55 per week or £243 per month. The £55 per week x 52 weeks / 12 months is £238.33 so I assume that is where this has come from.

If you are claiming the childcare monthly then you can have £243 per month.

The above assumes that you are a basic rate tax payer based on your salary, if you have a higher salary and entered the childcare scheme after 06/04/2011 then the amount will be lower.

Craig

7of9
13th January 2014, 15:43
Thank you very much, eek and Graig. £243 it is. I am going to write an agreement for my childminder and I to sign. Is there any thing else I or my accountant need to do?

Craig at Nixon Williams
13th January 2014, 15:56
Thank you very much, eek and Graig. £243 it is. I am going to write an agreement for my childminder and I to sign. Is there any thing else I or my accountant need to do?

Set up the payment of £243 to come from the company each month and give a copy of the agreement to your accountant for their records.

Aside from that it sounds like you're set!

Craig

7of9
14th January 2014, 14:41
Set up the payment of £243 to come from the company each month and give a copy of the agreement to your accountant for their records.

Aside from that it sounds like you're set!

Craig

Thanks Craig. I wish my account manager can response this fast.

JRCT
8th April 2014, 14:24
Thank you very much, eek and Graig. £243 it is. I am going to write an agreement for my childminder and I to sign. Is there any thing else I or my accountant need to do?

It should be noted that any child-minder needs to be approved/ registered. You can't just give £243 to Gladys next door.

css_jay99
1st September 2014, 16:59
My 10month old is starting nursery tomorrow and in my true fashion of timing just started looking at childcare vouchers ...


The mrs will be getting £243 from work. She also said her HR dept was also mentioning something about salary sacrifice which i really did not understand ...

Anyhow, after reading via this thread I have two questions.

1) If I make my Mrs and employee/secretary of my ltd company can I also give her £243 child voucher as well as well considering she is getting that at work ?. Our Nursery fees is about £1100 monthly:mad. This would mean giving the nursery £729
2) What should be the content of agreement with the nursery?


cheers

css_jay99
4th September 2014, 11:25
1) If I make my Mrs and employee/secretary of my ltd company can I also give her £243 child voucher as well as well considering she is getting that at work ?. Our Nursery fees is about £1100 monthly:mad. This would mean giving the nursery £729
2) What should be the content of agreement with the nursery?


Advice pls

thanks

LisaContractorUmbrella
4th September 2014, 12:30
Advice pls

thanks

I can't vouch for the information provided here http://www.daccountant.co.uk/Childcare%20vouchers%20via%20your%20own%20limited% 20company.pdf but it might answer your questions

css_jay99
4th September 2014, 15:53
Thanks Lisa,

That answers my 2nd question

LisaContractorUmbrella
10th September 2014, 07:23
Thanks Lisa,

That answers my 2nd question

Glad to help :happy

ASB
10th September 2014, 09:33
She also said her HR dept was also mentioning something about salary sacrifice which i really did not understand ...

Salary sacrifice means it will come out of her gross pay without deductions. So there is a tax and Ni saving (and an NI saving for the company too). Though it does depend on the exact circumstances.

A write up here:-

Childcare Vouchers - A Working Parents guide to Salary Sacrifice (http://www.childcarevouchers.co.uk/parents/parent-support/salary-sacrifice-guide/#.VBAayfldXIU)