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Childcare Vouchers through your Limited Company

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Carrington Accountancy


Recently some of our clients have been asking about Childcare Vouchers and if they are able to run these costs through their limited companies.  Here is a recent question we received and our response:

Can I use my limited company to cover some of the costs of my childcare? What is the maximum amount that can be claimed as a business expense? . Also does the child minder have to be registered.

John Mumford, our Technical Director answers:

A company can claim a maximum of £243 per employee per month for childcare vouchers. If both the husband and wife are employed by the company then each can claim this amount so they would get a total of £486 tax and NI free. However, the relief you get is capped at basic rate so if the person getting the vouchers is known to be a 40% taxpayer it gets reduced to £124 per month.

To benefit from the Tax and National Insurance exemption your childcare provider must hold either a current registration certificate (with a unique reference number (URN) or an approval certificate with an expiry date and reference number.

Recognised approval organisations include:

  • Ofsted Childcare Register - Compulsory(England)
  • Ofsted Childcare Register - Voluntary (England)
  • Local Health and Social Services Trusts (Northern Ireland)
  • The Care Commission (Scotland)
  • Childcare Appoval Scheme (Wales)
  • The Care Standards Inspectorate (Wales)

If you are paying direct to a nursery then the the easiest way is to set up a formal agreement between the company and the registered nursery/childcare provider to pay up to the maximum, with an agreement that any excess is paid personally by the parent. The company then pays direct to the nursery.

Here is a Sample agreement that you can use but this should be put on company notepaper:

Henry the Cat Day Nursery

1 Nursery Hill



Dear Sir,

I agree to purchase childcare from you to the value of £243 per week from 6 July 2012. I intend to give the childcare as a benefit to my employee John Smith for use by his daughter, Jane. This agreement may be amended or cancelled if John leaves my employment.

Yours faithfully,

A Jones

Jones Consultancy Ltd

If you have any questions about Childcare Vouchers or would like further information please don't hesitate to contact us here at Carrington Accountancy.