Childcare Vouchers

Fingersan

Hi Everyone

I don't know if one of you wise heads in practice has any suggestions.... I have a client who, against the national trend, has made a decent profit this year and so his tax credits will be reduced next year.

The guy is a sole trader and asked if he can get childcare vouchers to pay a nursery. My immediate reaction (and still current reaction) is no, as he is self employed and not operating a PAYE scheme.

If he were to set up a company and pay himself a salary, that would be fine but as a self employed individual, he cannot do this, which seems a bit harsh.

Can anyone think of an alternative to this? I had thought about him setting up a PAYE scheme and employing his wife, but she already works and is in receipt of childcare vouchers.

Thanks for your help, as always.

burg

I agree that self employed can't run the scheme but do consider the fact that those with income below £42,000 and claiming Tax Credits can work out worse off using the vouchers as you cannot claim the 80% TC funding on the voucher element. HMRC have a calculator here http://www.hmrc.gov.uk/calcs/ccin.htm

Fingersan

Thanks Burg

Just put some numbers into the calculator and, according to the Revenue, my client would be BETTER off by -£2,000 !!!!