Home » Business » { What Childcare Vouchers Can You Claim as a Contractor? }

Contractor Childcare Vouchers vs Tax-Free Childcare It is not easy balancing contracting use childcare. You may either cut back on the job by looking after your children or lose a few of your earnings paying outfor childcare. Childcare vouchers offer a sensible solution,providing people tax relief to the money they put towards childcare. But from October 2018,they will no longer be available to new applicants. Instead,people are able to argue through the Tax-Free Childcare scheme. {So,how does it allwork? |} Can contractors claim? And what’s the smartest choice for you? {Read on forhttps://www.whichumbrellacompanies.com manual to contractor childcare vouchers and tax-free childcare.|} Which are childcare vouchers? The Childcare Voucher scheme allows employees to take a few of their salary as childcare vouchers,instead of money directly into their bank accounts. Why? By doing so,this part of their wage is exempt from tax and national insurance. Employees may take up to #55 per week of their salary as childcare vouchers. This can be used to pay for approved childcarecosts,including: Registered childminders,nurseries or clubs Childminders through an Ofsted-registered agency A registered school A maintenance worker through a documented home care agency Depending on the particular scheme,these vouchers may also be used on childcare assistance supplied by your company — like an on-site staff nursery. Needless to say,these vouchers can only be used for your ownchild or stepchild who lives with you. £55 per week figures to £243 per month and over £2,800 over the course of a year. {Contemplating exemptions for both tax (20%) and national insurance (13.8%),that offers a huge benefit of over £1,000 for basic rate tax payers.|} The amount you can claim is reduced slightly for greater and additional rate taxpayers: { Greater rate: £28 weekly,£124 per month and £1484 per year Extra rate: £22 weekly,£97 per month and £1166 per year Contractor childcare vouchers |} Because they are not classed as an employee,self-employed contractors can’t claim childcare vouchers. There are methods for contractors to acquire the advantages of tax-free childcarevouchers,nevertheless. {Firstly,through their own limited company. |} Contractors working as a limited company may pay childcare providers directly,which will reduce their corporation tax invoice. On the other hand,the simplest way is through a contracting umbrella. Because they add contractors as an employee,you are able to get the benefits of childcare vouchers with no extra admin on your part. The value of childcare vouchers is simply subtracted from your wage before it is processed through pay-as-you-earn tax. Things are shifting By 4th October 2018,new applicants can no longer combine childcare voucher schemes. People already registered on a childcare vouchers scheme can continue to use it as long as they stay with the same company and the company continues to conduct the scheme. Instead of childcare vouchers,new programs need to go through Tax-Free Childcare to gain tax exemption on a few childcare expenses. Tax-Free Childcare works by reducing the price of childcare to 80 percent. The government pays £2 for each £8 you cover towards childcare. Basically,for £300 value of nursery expenses,you would pay £240 and the government would contribute the rest £60. Thus,the childcare prices are effectively tax-free for parents. This is available to the value of £500 each 3 months,per child. Who is eligible for Tax-Free Childcare? Tax-Free Childcare is meant to reduce the financial burden of childcare for working parents. It covers all of the exact same registered childcare providers as childcare vouchers however is only available for children aged 11 or below — or16 and under having a disability. {You are eligible if you and your partner (if you have one) are in work and earning at least the minimum wage for 16 hours per week or longer. |} But you won’t be eligible if you or your partner has a taxable income over £100,000. The main benefit with Tax-Free Childcare is that self-employed workers may use the system. Instead of employers deducting prices before processing salary,the childcare prices are processed through an online account,in which the government contributes their 20 percent of the price tag. Assessing the two As previously mentioned,present consumers of childcare vouchers may continue to use them as long as their company continues to use the scheme. {But as soon as they begin using Tax-Free Childcare,their childcare vouchers will be stopped. |} So,which is best for you? Because childcare vouchers create your earnings exempt from bothtax and national insurance — rather than just redeeming the tax value like Tax-Free Childcare — they are the ideal alternative for the majority of parents. On the other hand,the limits on how much you can spend with childcare vouchers makes them unsuitable for parents with different children. { Tax-Free Childcare is the better option for just about any parents spending over £4,650 on registered childcare or functioning couples spending over £9,300.|} Another government scheme which goes hand in hand with Tax-Free Childcare is 30 Hours Free Childcare. {This does exactly what it says on the tin — gives 30 hours of free childcare to parents who are eligible. |} Providentially,the eligibility criteria are just like for its Tax-Free Childcare scheme. While allparents get 15 hours of free childcare for 3-4-year-old pre-school children,this scheme offers double that to those who are working over 16 hours a week. Make contracting easier Childcare is only one of themany considerations for contractors. In addition to that,you’ve got invoicing,tax and expenses to be worried about,together with your true work. Umbrella companies make matters easier,processing your earnings and paying you an easy net sum Every Month {www.whichumbrellacompanies.com can help you find the right umbrella company. |} Our online comparison tool helps you compare different providers in a matter of minutes. Any queries? Get in touch with our team who will be happy to assist.

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