Company supported childcare

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23 Sep 2013

It’s possible for your company to contribute towards your childcare costs and this can be a tax-efficient addition to your remuneration strategy.

If you have childcare costs, your contracting company is able to contribute towards these costs either by setting up a childcare voucher scheme or by having a direct arrangement with the childcare provider. We think that a childcare voucher is admin heavy and can be expensive to run so we recommend that the company pays the childcare provider direct.

The first £55 per week (£243 per month) of childcare benefits can be given tax free provided the following conditions are met:

The tax exemption covers the first £55 per week of the cost only. So, whatever the total cost of the childcare, only £55 can be paid by the company, otherwise a benefit-in-kind will arise.

The childcare provider should invoice the company FOR NO MORE THAN £55 PER WEEK OR £243 PER MONTH and the payment should be made from the company bank account.

It should be remembered that if you are a higher rate tax payer then the weekly allowable amount drops to £28 and to £22 if you pay at the additional 50% rate.