Paying childcare costs through company

[TheCyclingProgrammer]

Went for a tour of a nursery this morning as we are thinking of sending our 2.5 year old one or two days a week. Naturally I wondered if this could be put through the company and having done a bit of research it seems that it can (with certain conditions).

I've done a search on here and emailed my accountant but was just wondering what the best approach is when the weekly costs exceed the allowable £55 and what other people do in that situation. From what I can tell the options are:

1) Directly contract the nursery with my Ltd and agree to contribute £55 a week towards the costs and make up the difference personally. Possibly a pain for the nursery if they have to allocate two different payments to a single invoice.

2) Directly contract with Ltd and pay the full costs (lets say £75 a week). Pay Class 1A and employer NI contributions on the excess. I still have a few grand of personal allowance left after my basic salary so I'm assuming there would be no income tax to pay on the excess. Is the full £75 a week still fully tax deductible for corporation tax purposes, or just the first £55 + employer NI contributions?

3) Use a childcare voucher scheme, pay the nursery directly using the vouchers plus any excess in cash. Means paying some commission to the scheme operator but possibly the least faff?

4) Hidden option number 4?

EDIT: Looks like if I was to use somebody like KiddiVouchers.com, the company would pay £55 a month and then we could personally top the vouchers up to whatever we need to cover the costs and the nursery would just be paid directly by the voucher scheme. Seems it would cost approx. £8/month in commission so I may have answered my own question.

[northernladuk]

Did none of the threads you found in your search answer these questions?

Did you use the search as per the Welcome/FAQ section or the search box which is crap?

[TheCyclingProgrammer]

Did none of the threads you found in your search answer these questions?

Nope, or I wouldn't have asked! To be fair, a lot of the results were quite old and I believe the rules have changed a bit in the last few years (2011?) so I didn't want to rely on out-of-date information.

Did you use the search as per the Welcome/FAQ section or the search box which is crap?

Advanced search for childcare in thread title, which admittedly may not have yielded the result I was after.

[TheCyclingProgrammer]

Looks like if I was to use somebody like KiddiVouchers.com, the company would pay £55 a month and then we could personally top the vouchers up to whatever we need to cover the costs and the nursery would just be paid directly by the voucher scheme. Seems it would cost approx. £8/month in commission so I may have answered my own question.

[TheCyclingProgrammer]

Another thought that crossed my mind...my partner is a 25% shareholder but not an employee or company officer. Reading some other threads on here suggest it might be beneficial for her to be the company secretary so she is eligible for entrepreneurs relief if/when I close my company down.

So...without opening the can of worms of how much I would pay her in terms of salary (I know some people pay right up the NI threshold but I don't think that's justifiable), but assuming some kind of nominal salary for becoming the company secretary and taking over some of my responsibilities in terms of paperwork/bookkeeping to justify said salary, would that also mean we would potentially benefit from double the childcare allowance? It's per employee, right?

[northernladuk]

Do you not think it is time to ring that accountant and have a chat with him?

[TheCyclingProgrammer]

Do you not think it is time to ring that accountant and have a chat with him?

He's already been sent several emails. Don't see why that precludes asking on here though!

Based on my own research, I believe making my partner company secretary would make her eligible for childcare regardless of her salary, so it's certainly looking like a route worth going down. I've already started making a mental list of my current admin duties to offload on her.

[blakeyuk]

Hi,

I've just started paying my nursery direct, after starting contracting about 6-7 weeks ago. Prior to that I paid via salary-sacrifice childcare vouchers through one of the larger providers.

I went with option 1. I've got the invoice here (they forgot to provide bank details, silly people), waiting to be paid. I'll transfer £243 to them once a month, and pay the rest by personal cheque. I don't see how them having one payment from your company and one from you personally, is any more or less faff then one from your voucher provider and one from you. I get one formal invoice for the £243, and a kind of timesheet/money owned thing for the personal monies.

Hope that helps,
Blakey

[kevpuk]

I looked into my options on this, and elected to pay the childcare provider direct from MyCo.
I used to get 'vouchers' via employers, back in permie days, and looked into a similar scheme via MyCo - in the end, couldn't see the point in paying a slice to the provider.

Speak to your accountant, but you can pay direct to childcare provider from YourCo, subject to certain limits etc., which are based on taxpayer status (e.g. higher rate or not) and so on....in most cases, where normal tax rate only applies, £243pcm/£55pw is the allowable limit as I recall. Ideally, if paying direct to childcare provider, you should aim to get invoice(s) paid by YourCo made out to YourCo, but I am not sure that this is a deal-breaker......pick up the phone

[jmo21]

I pay direct to the nursery.

No point in child care vouchers for our little companies, I guess those are to make it more manageable for big companies, so they don't have to setup lots of standing order to lots of different nursery/child care providers.