Can I get tax relief on my child care costs?

If you are a sole-trader you are unable to obtain any tax relief for your childcare costs.  If you trade via a Limited company the answer is a little different.

Currently, your company can pay up to £243 per month (in total, not per child) per qualifying employee.

No income tax or NI is payable on the benefit and the company can claim the expense against income.

If both parents earn a wage from the company then you are both entitled to claim this amount as long as the child is in qualifying childcare.

Rules:

1. Child carer is registered – usually means Ofsted approved or registered with local authority (can include after-school clubs)
2. The scheme only applies to children until 1st September after their 15th birthday (16th birthday if child is disabled).
3. Scheme is not available to pay for school fees
4. Must be available to all employees

Practicalities:

1. Simplest scheme is to pay childcare provider directly – can use a childcare voucher scheme but you will end up paying commission
2. Write a letter to the childcare provider informing them that your company will be contributing to payments
3. Make the payments from the company account (set up a standing order or direct debit arrangement)

The future:

This scheme will be replaced in Autumn this year by the government’s new ‘Tax-free Childcare scheme’

You will still be able to set up the childcare scheme outlined above until the new government scheme is available.

Existing schemes will run alongside the government’s new scheme.

Please contact me if you have any queries about how this scheme may be useful for you.  My email is lford@jonathanford.co.uk

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