Claiming childcare costs

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Claiming Childcare as an Expense through your Limited Company

Published on Monday, September 1, 2014

Written by Lauren Ellingham

It’s September, meaning the summer holidays have finally drawn to a close and the children are back at school. As a Director of a Limited Company you are able to claim a percentage of the costs of childcare as an expense through the Government’s Childcare Voucher Scheme. The scheme allows you to claim a maximum of £55 per week or £243 per month towards childcare costs incurred*.

*Please note if you are deemed to be a higher rate or additional rate tax payer then this amount may be reduced. These figures also refer to the limit per employee within the company, not per child.

To benefit from this scheme you must qualify, ask yourself...

  • Is the childcare provider registered and approved by the scheme?
  • Is the child under 16 years of age?
  • Is the child living with you?

 

If you have answered 'yes' to all 3 points above then you do qualify for the scheme.

There are two ways to pay for childcare by using the Childcare Voucher Scheme:

  1. Vouchers – your Limited Company can purchase vouchers from a voucher scheme provider and use these to pay the childcare provider
  1. Direct Agreements – you can set up an agreement between your Limited Company with the childcare provider.  They will provide invoices to your company on a weekly or monthly basis and the payment can be made direct from your business bank account up to the above stated limits (£55 per week or £243 per month).  Any amount in excess of these limits must be paid personally by yourself.

If you require any further information on claiming childcare as an expense please feel free to contact our Personal Tax Team on 01707 871610 or request a call back.

In the Know alert: As part of the 2014 Budget, the Government have announced a new scheme to provide 20% tax relief on childcare costs up to £10,000 to be introduced in autumn 2015. Please keep an eye out for our blog on the new rules throughout 2015 regarding this update.

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