Contractor's Questions: Childcare Vouchers

Question:



I have recently started an IT company of which I am the director.



I have a IR35 compliant contract and I will be taking a small salary and getting rest as dividend.



My query is whether my company can pay me Childcare Vouchers without me having to pay taxes?



Looking at various websites it does seem these vouchers are available for company directors but my accountant says for my Company to pay Childcare Vouchers, the company has to enter into a contract with me and that would impact from a minimum wages perspective and make my IR35 status vulnerable.



I think this is a very important and useful tax savings which many IT contractors could use, if feasible.



Answer.. kindly provided by Quay Accounting



"Under the voucher scheme there is no requirement for the employee to enter into a contract with the employing company (although there is a requirement for the employing company to enter into a contract with the childcare provider if the company is to provide childcare that is tax-free up to £50 per week (£55 as proposed in the Budget) other than under the voucher scheme).



Inland Revenue guidance sets out the format of the vouchers and the conditions that must be met at the time the voucher is used. The guidance does point out that if salary is sacrificed in return for the vouchers, salary must not be reduced below the National Minimum Wage, but for a director of a family company with no contract of employment, NMW does not apply.



The existence of a "contract of employment" between you and your own company would not adversely affect your status under IR35; but care should be taken that the work undertaken is actually outside the scope of the deemed salary (IR35) provisions. In this respect you should be considering the real day-to-day, on site, working relationship rather than relying solely upon the written word of the agency / client contract which may not truly or adequately reflect that relationship."