Could childcare save you tax?

Do you have children and pay for some kind of childcare? Did you know that you could pay less tax by utilising the childcare voucher scheme to pay for some, if not all, of your childcare costs? If like me one of your children has started school/preschool, which is not yet state funded, you will be paying for the cost of this childcare out of your after tax income. You may qualify for childcare vouchers which could save you around £300 for every £1,000 you spend on childcare. In a nutshell, the scheme means you pay less tax/NIC and your childcare costs are still paid for. Basic rate tax paying parents can use the vouchers to pay for up to £243 of childcare a month, so for two parents that’s £486 a month! There are a number of things to watch out for though:-

  • An “earnings assessment” needs to be carried out
  • You need to ensure all the relevant paperwork is in place
  • If you are employed you will need to discuss it with your employer
  • There is a sliding scale for those who are higher rate tax payers
  • If you run your own limited company and are not operating this scheme, maybe you should contact a proactive accountant
  • Specific scheme rules apply

If you are an employee, or run your own limited company, you could benefit from childcare vouchers. If your current accountant has not mentioned this to you, perhaps you should get in touch to find out some of the other ways we could help you #keepmoremoney

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